Chapter 1

Introduction to Operations Management


Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Chapter 1: Learning Objectives ‡ You should be able to: ± Define the term operations management ± Identify the three major functional areas of organizations and describe how they interrelate ± Compare and contrast service and manufacturing operations ± Describe the operations function and the nature of the operations manager¶s job ± Identify the two major aspects of process management ± Describe the key aspects of operations management decision making ± Briefly describe the historical evolution of operations management ± Identify current trends in business that impact operations management 1-2 .

Operations Management ‡ What is operations? ± The part of a business organization that is responsible for producing goods or services ‡ How can we define operations management? ± The management of systems or processes that create goods and/or provide services 1-3 .

Supply Chain Supply Chain ± a sequence of activities and organizations involved in producing and delivering a good or service Suppliers¶ suppliers Direct suppliers Producer Distributor Final Customers 1-4 .

and final products. form or psychological value. location. ‡Air travel ‡Education ‡Haircut ‡Legal counsel 1-5 . ‡Automobile ‡Computer ‡Oven ‡Shampoo Services are activities that provide some combination of time.Good or Service? Goods are physical items that include raw materials. parts. subassemblies.

. The operations function includes many interrelated activities such as: ± ± ± ± ± ± ± ± Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more . .Scope of Operations Management The scope of operations management ranges across the organization. 1-6 .

A primary function of the operations manager is to guide the system by decision making. ± System Design Decisions ± System Operation Decisions 1-7 .Role of the Operations Manager The Operations Function consists of all activities directly related to producing goods or providing services.

Why Manufacturing Matters ‡ Over 18 million workers in manufacturing jobs ‡ Accounts for over 70% of value of U. exports ‡ Average full-time compensation about 20% higher than average for all workers ‡ Manufacturing workers more likely to have benefits ‡ Productivity growth in manufacturing in the last 5 years is more than double that of the U.S. economy 1-8 .S.

Why Study OM? ‡ Every aspect of business revolves around operations ‡ Many service jobs are closely related to operations ± ± ± ± Financial services Marketing services Accounting services Information services ‡ There is a significant amount of interaction and collaboration amongst the functional areas ‡ It provides an excellent vehicle for understanding the world in which we live 1-9 .

Career Opportunities in OM ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Operations manager Production analyst Production manager Industrial engineer Time study analyst Inventory manager Quality analyst Quality manager 1-10 .

The Association for Operations Management American Society for Quality (ASQ) Institute for Supply Management (ISM) Institute for Operations Research and Management Science (INFORMS) ‡ The Production and Operations Management Society (POMS) ‡ The Project Management Institute (PMI) ‡ Council of Supply Chain Management Professionals (CSCMP) 1-11 .OM-Related Professional Societies ‡ ‡ ‡ ‡ APICS .

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? 1-12 .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.

will teaching business ethics make a difference in people¶s behavior? 1-13 .Ethics Ethical issues have gained increasing visibility in recent years. ± Enron ± Worldcom ± Tyco ‡ Can you think of any positive displays of business ethics? ‡ Why do people do things that are unethical? ‡ Can ethics be taught? More importantly.

Historical Evolution of OM ‡ Industrial Revolution ‡ Scientific Management ‡ Human Relations Movement ‡ Decision Models and Management Science ‡ Influence of Japanese Manufacturers 1-14 .

Key Trends and Issues in Business ‡ E-Business & E-Commerce ‡ Management of Technology ‡ Globalization ‡ Management of Supply Chains ‡ Outsourcing ‡ Agility ‡ Ethical Behavior 1-15 .