Operation Management

Course Facilitator: Ammara Umar Awan

Ammara.umards18l@gmail.com
 OM

The set of activities that creates “goods and services” by

transforming inputs into outputs.
Examples

Inputs Process Outputs Building

Blocks

Land, Importance

Labor, Goods
Production or Service 10 O.M
Capital,
and Decisions
Materials, System
Services
Equipment, Productivity

Management
Exercises
 OM

The Operations management is the management of systems

that produce goods and provide services.
Examples

Production Services
Building
Blocks

 Auto factories (assembly  Hospitals

Importance
plants)
 Airlines
 Job shops (printing) 10 O.M
 Movie theaters Decisions
 Fast food restaurants
 Grocery stores
Productivity

Exercises
 OM

Examples

Finance/
Marketing Operations
Accounting Building
Blocks

Importance

10 O.M
Flight Ground Facility Decisions
Catering
Operations Support Maintenance
Productivity

Exercises
 OM

Examples

Building
Blocks

Marketing Finance/
Operations Importance
Accounting

10 O.M
Decisions

Manufacturing Production Quality

Purchasing
Control Control Productivity

Exercises
 OM

OM is one of three major functions of any organization

Examples
(Marketing, Finance, and Operations).

Building
We should know how goods and services are produced. Blocks

Importance
OM is such a costly part of an organization.

10 O.M
Decisions
Jobs!

Productivity

Exercises
 OM

Examples

Building
Blocks

Importance

10 O.M
Decisions

Productivity

Exercises
1. Product & service design. (Customer Test, #? Profits) OM

2. Quality management. (6 Sigma, humidity, weight, delivery)

Examples

3. Process design & capacity(Tech, green prd, recycling, energy)

Building
4. Location of facilities.(Raw material/End customer, free zones,Taxes) Blocks

5. Layout of facilities.(Efficient flow of Material ,People, Info) Importance

6. Human resources & Job design.(Right RRRRR)

10 O.M
Decisions
7. Supply-chain management.(Sourcing to distribution)
8. Inventory management.(Ordering vs holding cost, EOQ) Productivity

9. Scheduling.(Batches, ordering)
Exercises
10. Maintenance. (Shutdowns)
The ratio of outputs (goods and services) divided by one or more OM

inputs (such as labor, capital, or management).

Examples

Single Factor-Ratio of goods and services produced (outputs) to Building Blocks

one resource (input).

Importance

10 O.M
Decisions

Single Vs
Multifactor
 OM
Multi-Factors Indicates the ratio of goods and services
produced (outputs) to many or all resources (inputs).

Examples

Building Blocks

Productivity in Service Sector

1. Typically labor intensive (e.g., counseling, teaching). Importance

2. Frequently focused on unique individual attributes or desires

(e.g., investment advice).
3. Often an intellectual task performed by professionals (e.g., 10 O.M
Decisions
medical diagnosis).
4. Often difficult to mechanize and automate (e.g., a haircut).
5. Often difficult to evaluate for quality (e.g., performance of a
Single Vs
law firm). Multifactor
 OM
Amount of output relative to input.
Output:
 Number of meals served? Examples
 Number of tables served?
 Number of satisfied
customers? Building Blocks

Input:
 Lbs. of food? Importance
 Number of employees?
 Number of tables?
10 O.M
Decisions

Single Vs
Multifactor
 OM

EFU Insurance Ltd. wants to evaluate its labor and multifactor

productivity with a new computerized title-search system.
Examples
The company has a staff of four, each working 8 hours per day
(for a payroll cost of $640/day) and overhead expenses of $400
per day. Collins processes and closes on 8 titles each day. Building Blocks
The new computerized title-search system will allow the
processing of 14 titles per day. Although the staff, their work
hours, and pay are the same, the overhead expenses are now Importance
$800 per day.
Calculate Labor productivity with old & new system?
10 O.M
Calculate multifactor productivity with old & new system? Decisions

Single Vs
Multifactor