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Production and Operations

Management (POM)
The management of processes or systems
that create goods and/or provide services.

It encompasses forecasting, capacity
planning, scheduling, managing inventories,
assuring quality, motivating employees,
deciding where to locate the facilities and
more.
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Functions and Business Operation
Organizations are formed to pursue goals that are
achieved more effectively by the concerted efforts of a
group of people than by individuals working alone.
Operations
Marketing
Finance
Figure 1-1. The three major functions of business organizations overlap
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Three Basic Functions of Business
Organization
1. OPERATIONS

-consists of all activities directly related to producing
good or providing services.

- it can be goods-oriented. (manufacturing and
assembly operations)

- it can be service-oriented. (health care,
transportation, food handling, and retailing)
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Production and Operation System
Inputs are used to obtained finished goods
using one or more transformation processes
(e.g. storing, transporting, cutting).
To ensure that the desired outputs are
obtained, measurement are taken at a
various point in the transformation process
(feedback) and then compared with the
previously established standard to determine
whether correctively action is needed
(control).
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2. FINANCE
Comprises of activities related to
securing resources at favorable
prices and allocating those resources
throughout the organization.
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Finance and operations management personnel
cooperate by exchanging information and
expertise in activities such as:
1.Budget must be periodically prepared to plan
financial requirements.
2. Economic analysis of investment proposals
evaluation of alternative investment in plant
and equipments requires input from both
operations and finance people.
3. Provision of funds necessary funding of
operations and the amount and timing of
funding
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3. MARKETING
Focus on selling and/or promoting the goods and
services of an organization.

Responsible for assessing customer wants and
needs.

Provide the information needed by the operations
about demand over the short to intermediate
term so that it can plan accordingly (e.g.
purchase materials, schedule work)



Lead time the time between ordering a good or
services and receiving it.
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Other Functions
1. Accounting supplies information to management on cost of
labor, materials, and overhead and may provide reposts on items
such as scrap, downtime and inventories.
2. Management Information System (MIS) providing management
with the information it needs to effectively manage.
3. Purchasing responsible for procurement of materials, supplies,
and equipment.
4. Personnel or Human Resources _ concerned with recruitment
and training of personnel, labor relations, wages and salaries and
ensuring health and safety of employees.
5. Public Relations responsible for building and maintaining a
positive image of the organization.
6. Distribution involves shipping of goods to warehouse, retail
outlets or final consumer.
7. Maintenance responsible for general upkeep and repair of
equipment, building and grounds, heating and air-conditioning,
removing toxic waste.
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Differentiating Features of Operations
System
1. Degree of Standardization

2. Type of Operation

3. Production of Goods versus
Service Operation
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DEGREE OF STANDARDIZATION
Standardized Output
- means that there is a high degree of uniformity in
goods or services.

Customized Output
- means that the product or service is designed for
specific case or individual.
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TYPES OF OPERATION
The degree of standardized products and the volume of
output of a producer or service influence the way firm
organizes production.

The four Vs of operations:

Volume how many products or services are made by
the operation?
Variety how many different types of products or
services are made by the operation?
Variation how much does the level of demand change
over time?
Visibility how much of the operations internal working
are exposed to its customers?


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PRODUCTION OF GOODS
VERSUS SERVICE OPERATION
Production of goods - results in a tangible
products.

Service operation - generally implies an act.
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Differences Between Goods and Services
1. Customer contact
2. Uniformity of input
3. Labor content of job
4. Uniformity of output
5. Measurement of productivity
6. Simultaneous production and delivery
7. Quality assurance
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The Operations Manager and the
Management Process
The operations manager is the key
figure in the system: he or she has the
ultimate responsibility for the creation
of goods and provision for services.
The operations manager must
coordinate the use of resources through
the management process such as
planning, organizing, staffing, directing
and controlling.
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OPERATIONS MANAGER AND
DECISION MAKING
General Approaches to Decision Making:

1. Use of models
2. Quantitative methods
3. Analysis of trade-offs
4. The system approach
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MODEL
- an abstraction of reality; a simplified version of
something
Classification of Models
1. Physical Models look like their real-life counterparts.

2. Schematic Models more abstract than their physical
counterparts (less resemblance to physical reality)
- there are often relatively simple to construct
and change.

3. Mathematical Models the most abstract: they do not look at
all like their real-life counterparts.
- these are usually the easiest to manipulate and
they are important forms of inputs for computers and
calculators.
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2. QUANTITATIVE APPROACHES
- Quantitative approaches to problem
solving embody an attempt to obtain
mathematically optimum solutions to
managerial problems.

3. ANALYSIS OF TRADE-OFF
- Manager sometimes deal with decision by
listing the advantages and disadvantages
pros and cons of a course of action to
better understand the decision they must
make.
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4. SYSTEMS APPROACH
System a set of interrelated parts that must work
together.

In a business organization, the organization can be
thought of as a system compose of subsystem.

The system approach emphasizes
interrelationships among subsystems, but its
main theme is that the whole is greater than the
sum of its individual parts.