Production &
Operations
Management
(SCM- 501)

Introduction to
Operations Management
Chapter 1

William J Stevenson
 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

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 Operations management (OM) is the business function
responsible for managing the process of creation of
goods and services.
It involves planning, organizing, coordinating, and
controlling all the resources needed to produce a
company’s goods and services.
Because operations management is a management
function, it involves managing people, equipment,
technology, information, and all the other resources
needed in the production of goods and services.
 Operations management is the central core function
of every company. This is true regardless of the size of
the company, the industry it is in, whether it is
manufacturing or service, or is for-profit or not-for-
profit.

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• Operations management as defined by Stevenson
(2004) is the management of particular aspects
of an organization. This usually encompasses
systems and workstation design, physical plant
design and layout as well as processes needed to
change raw material/inputs into a finished
product or service.
• Operations manager.
– Stevenson (2004) adds that the integral component of
an operations manager is to add value to the finished
product.

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Ma'am Erum Fatima - DHA Suffa University
 Good or Service?
Goods are physical items that include raw materials,
parts, subassemblies, and final products.
•Automobile
•Computer
•Oven
•Shampoo

Services are activities that provide some combination

of time, location, form or psychological value.
•Air travel
•Education
•Haircut
•Legal counsel
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 The Transformation Process
Value-Added

Inputs Transformation/ Outputs

•Land Conversion •Goods
•Labor •Services
•Capital Process
•Information

Measurement
and Feedback
Measurement Measurement
and Feedback Control and Feedback

Feedback = measurements taken at various points in the transformation process

Control = The comparison of feedback against previously established standards

to determine if corrective action is needed.
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 Manufacturing vs. Service
1. Degree of customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance
8. Amount of inventory
9. Evaluation of work
10.Ability to patent design
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 Scope of Operations Management
The scope of operations management ranges across the
organization.
The operations function includes many interrelated
activities such as:
 Forecasting
 Capacity planning
 Facilities and layout
 Scheduling
 Managing inventories
 Assuring quality
 Motivating employees
 Deciding where to locate facilities
 And more . . .
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 Role of the Operations Manager
The Operations Function consists of all activities directly related
to producing goods or providing services.

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 Why Study OM?
• Every aspect of business affects or is affected by 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

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 OM and Supply Chain
Career Opportunities
• Operations manager
• Supply chain manager
• Production analyst
• Schedule coordinator
• Production manager
• Industrial engineer
• Purchasing manager
• Inventory manager
• Quality manager

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 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, 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?

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 Historical Evolution of OM

• Consider
Table 1.5
for key
Developme
nts

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University
 Historical Evolution of OM
Industrial Revolution
 Craft Production
Scientific Management
 Frederick W.Taylor
 Mass Production
 Division of Labor
Human Relations Movement
 Importance of Human
Decision Models and Management Science
 Inventory Management Model
 Sampling Procedures
 Quality Control Procedures
Influence of Japanese Manufacturers
 Improve Productivity & Quality
 Competitive
 Just In time (JIT)

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Steam Engine

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Ma'am Erum Fatima - DHA Suffa University
 Ford assembly line, 1913. The
magneto assembly line was the first.

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 DIVISION OF LABOR

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Influence of Japanese Manufacturers

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 Key Issues for Operations
Managers Today
• Economic conditions
• Innovating
• Quality problems
• Risk management
• Competing in a global economy

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