Operations Management

Operations and Productivity

Chapter 1

Mira Meilia Marka, SE, MM

UNIVERSITAS MURIA KUDUS
 Learning Objectives

When you complete this chapter, you should be

able to :

Identify or Define:
– Production and productivity
– Operations Management (OM)
– What operations managers do
– Services
 Operations
Management ?
Production is the creation of goods and
services

Operations management is the set of

activities that creates value in the form of
goods and services by transforming inputs
into outputs (Heizer & Render, 2011)
 PROCESS

INPUT OUTPUT
 Organizational Functions

• Marketing
– Gets customers

 Operations
 creates product or service

 Finance/Accounting
 Obtains funds
 Tracks money
© 1995 Corel Corp.
 Functions - Manufacturer

Manufacturing

Marketing Operations Finance/

Accounting

Manufacturing Production Quality

Purchasing
Control Control
 Functions - Bank

Commercial Bank
© 1984-1994
T/Maker Co.

Marketing Operations Finance/

Accounting

Teller Check Transactions

Security
Scheduling Clearing Processing
 Why Study OM?

• OM is one of three major functions

(marketing, finance, and operations) of
any organization.
• We want (and need) to know how goods
and services are produced.
• We want to understand what operations
managers do.
• OM is such a costly part of an
organization.
 What Operations Managers Do

Plan - Organize - Staff - Lead - Control

1. Service, product design
2. Quality management
3. Process, capacity design
4. Location
5. Layout design
6. Human resources, job design
7. Supply-chain management
8. Inventory management
9. Scheduling
10. Maintenance
 The Critical Decisions
1. Service and product design
– What product or service should we offer?
– How should we design these products and services?
2. Quality management
– Who is responsible for quality?
– How do we define quality?
3. Process and capacity design
– What processes will these products require and in
what order?
– What equipment and technology is necessary for
these processes?
 The Critical Decisions
4. Location
– Where should we put the facility
– On what criteria should we base this location decision?
5. Layout design
– How should we arrange the facility?
– How large a facility is required?
6. Human resources and job design
– How do we provide a reasonable work
environment?
– How much can we expect our employees
to produce? -- target and planning
 The Critical Decisions
7. Supply chain management
– Should we make or buy this item?
– Who are our good suppliers and how many should we have?
8. Inventory management
– How much inventory of each item should we have?
– When do we re-order?
9. Scheduling
– Is subcontracting production a good idea?
– Are we better off keeping people on the payroll during
slowdowns?
10. Maintenance
– Who is responsible for maintenance?
– When do we do maintenance?
– all activities involved in keeping a
system’s equipment in working order ”.
 Goods vs Services

GOODS SERVICES
• Can be resold • Reselling unusual
• Can be inventoried • Difficult to inventory
• Some aspects of • Quality difficult to
quality measurable measure
• Selling is distinct • Selling is part of
from production service
 Productivity

Productivity = unit produced

input used

Measure of process improvement