By

Ameni Azzouz, PhD

Assistant Professor at IT Department, TBS, University of Tunis
Senior Researcher in Artificial Intelligence, Optimization and
scheduling in production systems

Academic Year 2021-2022

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 Chapter 1: Introduction to operations management
 Chapter 2: Project management
 Chapter 3: Forecasting
 Chapter 4: Inventory Management
 Chapter 5: Material Requirement Planning
 Chapter 6: Location and Layout Strategy
 Chapter 7: Short-term Scheduling

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 Learning Objectives:
◦ Define and explain OM
◦ Explain the role of OM in business
◦ Understand some of the basic concepts of operations
◦ management.
◦ Distinguish between different types of operations
◦ Understand the meaning of efficient and effective operations
◦ Describe the differences between service and manufacturing
operations
◦ Relationship between operation and strategy

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 A management function: (operation function) That
part of the organization that has the responsibility for
operations management.

 This is concerned with the management of the

resources and processes required by an organization
to produce goods or services for customers.

 The business function responsible for planning,

coordinating, and controlling the resources needed to
produce products and services for a company
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  Operations management is important because of its
impact on an organization’s costs and quality. No
organization can be successful unless it is able to
manage its operations efficiently and effectively
Efficiency Effectiveness

 Making best use of the resources at its
disposal.
 A high level of efficiency helps ensure
that the organization can achieve low
operating costs
 A measure of the success of an
operation in converting inputs to
outputs.
 Ensure that the customers receive what
they consider to be a high level of value
 Impact on the quality, availability,
timeliness and reliability of the goods
and services produced by an
organization
 A measure of the success of an
operation in producing outputs that
satisfy customers.
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 Commercial Bank

Operations Finance Marketing

Teller Scheduling Investments Loans
Check Clearing Security Commercial
Collection Real estate Industrial
Transaction Financial
processing Accounting Personal
Facilities Mortgage
design/layout
Vault operations Auditing
Maintenance Trust Department
Security

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 Airline

Operations Finance/ Marketing

Ground support accounting Traffic administration
equipment Accounting Reservations
Maintenance Payables Schedules
Ground Operations Receivables Tariffs (pricing)
General Ledger Sales
Facility
maintenance Finance Advertising
Catering Cash control
Flight Operations International
exchange
Crew scheduling
Flying
Communications
Dispatching
Management science
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 Manufacturing

Operations Finance/ Marketing

Facilities accounting Sales
Construction; maintenance Disbursements/ promotion
Production and inventory control credits Advertising
Scheduling; materials control Receivables Sales
Quality assurance and control Payables
General ledger Market
Supply-chain management research
Funds Management
Manufacturing
Tooling; fabrication; assembly Money market
International
Design exchange
Product development and design
Detailed product specifications Capital requirements
Industrial engineering Stock issue
Efficient use of machines, space, Bond issue
and personnel and recall
Process analysis
Development and installation of
production tools and equipment
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Essential functions:
Marketing – generates demand
Production/operations – creates the product
Finance/accounting – tracks how well the
organization is doing, pays bills, collects the money

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 OM transforms inputs to outputs
 Any operation can be depicted as a transformation process
which converts inputs of resources (e.g. people, equipment,
materials, energy, information) to outputs of goods and
services.
 Slack et al. (2004) usefully developed this model by
distinguishing between transformed and transforming
resources

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 Transformed resources are those resources that are
themselves transformed to become part of the output of the
operation. Typically these are materials and/or information
and/or and customers.
 Transforming resources are those that are necessary to carry
out the transformation but do not themselves form part of
the output

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 Operations can be classified into three different types
depending upon which type of resource is predominantly
being transformed by the operation:

◦ Materials processing operations,

◦ Information processing operations
◦ Customer processing operations

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 Operations can be classified more simply in terms of
their outputs, as either goods or services. The factors
which distinguish them are:
◦ Tangibility
◦ Simultaneity
◦ Customer contact
◦ Quality

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 Many service operations are different from those in
manufacturing in that they usually require the
operation to have some degree of contact with the
customer
 The area in which contact with customers occurs is
termed the front office. This primarily involves
customer processing operations.
 The area where there is normally no contact with
customers is termed the back office. This may involve
information and/or materials processing operations

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 Services  Manufacturers:
 Intangible product  Tangible product

 Product cannot be  Product is inventoried

inventoried  Low customer contact
 High customer contact  Longer response time
 Short response time  Capital intensive
 Labor intensive

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Similarities :
 Both use technology
 Both have quality, productivity, & response issues
 Both must forecast demand
 Both can have capacity, layout, and location issues
 Both have customers, suppliers, scheduling and staffing issues

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 The distinction between manufacturing and services is
in many respects artificial and increasingly irrelevant

 The most basic product will have some element of

service accompanying it. Equally, most services have
some tangible product as an integral part of what is
delivered to the customer

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 Operations management is concerned with short-term, day-to-day,
tactical issues
 A business strategy is often thought of as a plan or set of intentions
that will set the long-term direction of the actions that are needed
to ensure future organizational success.
 An organization’s strategy can only become a meaningful reality, in
practice, if it is operationally enacted.
 The totality of daily operations constitute the organization’s long-
term strategic direction

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 The relationship between an organization’s strategy and its
operations is a key determinant of its ability to achieve long-
term success or even survival.
 The consistency between the short-term operations activities
and the long-term strategic intentions lead to the
Organizational ‘s success.
 OM is an integral part of an organization’s strategy.

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Strategy can be considered to exist at three levels in an
organization
 Corporate level strategy: is the highest level of strategy. It
sets the long-term direction and scope for the whole
organization.
 Business level strategy: is primarily concerned with how a
particular business unit should compete within its industry,
and what its strategic aims and objectives should be
 Functional level strategy: The bottom level of strategy is that
of the individual function (operations, marketing, finance,
etc.)

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 Criteria for evaluating an operations strategy
As Hayes et al. (2005) point out, effective operations strategies
need to be consistent and contribute to competitive advantage

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 Operations strategy concerns the pattern of
strategic decisions and actions which set the role,
objectives and activities of operations. (Slack et al.,
2004)
 Their use of the term ‘pattern’ implies a consistency
in strategic decisions and actions over time.

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 Cost or Price; Make the Product or Deliver the Service Cheap
 Quality; Make a Great Product or Deliver a Great Service
 Delivery Speed; Make the Product or Deliver the Service
Quickly
 Delivery Reliability; Deliver It When Promised
 Coping with Changes in Demand; Change Its Volume
 Flexibility and New Product Introduction Speed; Change It

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Basic Management Functions
 Planning
 Organizing
 Staffing
 Leading
 Controlling

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1) Service and product design
2) Quality management
3) Process and capacity design
4) Location
5) Layout design
6) Human resources, job design
7) Supply-chain management
8) Inventory management
9) Scheduling
10) Maintenance

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Significant Events in OM
 Project Management
 Forecasting
 Inventory Management
 Production Planning
 Material Requirement Planning
 Location Strategies
 Layout Strategies
 Short-term Scheduling

Present a real application of one of the studied topics

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