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Introduction To Operations Management: F O U R T H E D I T I O N
Introduction To Operations Management: F O U R T H E D I T I O N
F O U R T H E D I T I O N AQUILANO
CHASE
Inputs Outputs
(customers Transformation Process (goods
and/or (components) and
materials) services)
Exhibit 1.1
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–6
Top-down Approach to OM Strategy
• Operations Strategy Decisions
–Strategic (long-range)
• Needs of customers
(capacity planning)
–Tactical (medium-range)
• Efficient scheduling of
resources
–Operational planning
and control (short-range)
• Immediate tasks and
activities
Exhibit 1.2
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–9
Input-Transformation-Output
Relationships for Typical Systems
Exhibit 1.3
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–10
OM’s Contributions to Society
• Higher Standard of Living
–Ability to increase productivity
–Lower cost of goods and services
• Better Quality Goods and Services
–Competition increases quality
• Concern for the Environment
–Recycling and concern for air and water quality
• Improved Working Conditions
–Better job design and employee participation
Source: Handbook of U.S. Labor Statistics, edited by Eva E. Jacobs, Exhibit 1.6
1-6 Fifth Edition, Bernan Press, 2001, Table 2-1, pp. 161–164.
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–15
Differences Between
Goods and Services
• Goods • Services
–Tangible –Intangible
–Can be –Cannot be
inventoried inventoried
–No interaction –Direct interaction
between between
customer and customer and
process process
Exhibit 1.7
1-6 Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–16
Most Products Are a “Bundle”
of Goods and Services
Exhibit 1.8
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–17
An Expanded Definition of Quality
• Quality is important in all functional areas of
an organization.
• Quality is now much more than the technical
requirements for manufactured goods.
• Service quality (customer
relationships) is equally
important. Quality
Source: From Joseph E. Stiglitz, Principles of Micro-economics, 2nd ed. Exhibit 1.9
(New York: W.W. Norton and Company, 1997), p. 58.
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–21
Linking OM to Customers and Suppliers
• Benefits of Buffering the Transformation
Process
–The process was not disturbed by
environmental interaction.
–The process was often more efficient than input
and distribution processes.
–Productivity was maximized when processes
operated at continuous rates.
–Process management skills were different from
those of other functional activities.
Exhibit 1.10
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–24
Line and Staff Jobs in OM
Exhibit 1.11
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–25
Inputs Provided by OM to
Other Functional Areas
Exhibit 1.12
Fundamentals of Operations Management 4e © The McGraw-Hill Companies, Inc., 2003 1–26
Historical Development of OM
• Prior to 1900
–Cottage industry produced custom-made goods.
–Watt’s steam engine in 1785.
–Whitney’s standardized gun parts in 1801.
–Industrial Revolution began at mid-century.