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8/8/2019 Ch 1 Pom Basic Final
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Production
Production is the creation of goods
O.M. is the set of activities that create value
in the form of goods and services bytransforminginputs into outputs.
Operations Management(O.M.)
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Operations Management
DefinitionAn operations system is defined as one in which several activities are performed to transform a set of inputs into useful output
using a transformation process.Operations Management is a systematic approach to address all the issues pertaining to the transformation process that converts some inputs
into output that are useful, and could fetch revenue to the operations system
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Production
Production is the creation of goods
O.M. is the set of activities that create value
in the form of goods and services bytransforminginputs into outputs.
Operations Management(O.M.)
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Operations ManagementOperations Management
The management of systems or processesthat create goods and/or provide services
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Organizational
Functions
MarketingGets customers
Operationscreates product or service
Finance/AccountingObtains fundsTracks money
1995 Corel Corp.
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Why study OM?
OM is one of three major functions(marketing, finance, and operations) of anyorganization.
We want (and need) to know how goods andservices are produced.
We want to understand what operationsmanagers do.
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A business education is incompleteA business education is incompletewithout an understanding of modernwithout an understanding of modernapproaches to managing operations.approaches to managing operations.
OM provides a systematic way of lookingOM provides a systematic way of lookingat organizational process.at organizational process.
Why study OM?.. Contd
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Value Addition - ConceptValue Addition - Concept
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Production system
A production system uses operation resources to
transform inputs into desired outputsOperation resources- 5 Ps
OPERATIONS MANAGEMENT
Inputs Outputs
People Plants Parts Process
Planning and controlling system
PRODUCTION SYSTEM
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Manufacturing or Service?Manufacturing or Service?
Tangible Act
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Goods V/s Services CharacteristicsG OODS
TangibleConsistent product
definition
Production usually
separate fromconsumption
Can be inventoried
Low customer interaction
SERV I C E S
Intangible
Inconsistent product definition
Produced & consumed at
same time.
Cant be inventoried
High customer interaction
O ften unique
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Goods and Services
AutomobileComputer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/investment management
Consulting service/teaching
Counseling
Percent of Product that is a GoodPercent of Product that is a Good Percent of Product that is a ServicePercent of Product that is a Service
100%100% 7575 5050 2525 00 2525 5050 7575 100%100%|| || || || || || || || ||
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Responsibilities of OperationsResponsibilities of OperationsManagerManager
P roducts & services
Planning C apacity
Location
Make or buy Layout
Scheduling
Controlling/Improving Inventory Quality
Organizing
P rocess selection
Staffing
Hiring/laying off
Directing
Job assignments
C osts
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Key Decisions ofOperations Managers
What
What resources/what amounts
When
Needed/scheduled/orderedWhere
Work to be done
HowDesigned
Who
To do the work
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New Challenges in OM From
Local or national
focus
Large shipments
Lengthy product
development
Standard products Job specialization
Low cost
To
Global focus Just-in-time
Rapid product
development.
Mass customization Empowered
employees, teams
Environmental
sensitive
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Past Causes FutureLocal ornationalfocus
Low-cost, reliable worldwidecommunication andtransportation networks
Global Focus
Batch (large)shipments
Cost of capital puts pressure onreducing investment in
inventory
J ust-in-timeshipments
Low-bidpurchasing
Quality emphasis requires thatsuppliers be engaged in productimprovement
Supply-chainpartners
Lengthyproductdevelopment
Shorter life cycles, rapidinternational communication,computer-aided design, andinternational collaboration
Rapid productdevelopment,alliances,collaborative
designs
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Past Causes FutureStandardizedproducts
Affluence and worldwide markets;increasingly flexible production
processes
Masscustomization
Jobspecialization
Changing sociocultural milieu.Increasingly a knowledge andinformation society.
Empoweredemployees,teams, and lean
productionLow costfocus
Environmental issues, ISO 14000,increasing disposal costs
Environmentallsensitiveproduction,
Greenmanufacturing,recycledmaterials,
remanufacturin
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Decision Making in OM
Strategic Decisions
Tactical Decisions
Operational Decisions
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Strategic DecisionsLong-term significance for the organization.
Become the fixed conditions or operating
constraints for intermediate or short term
decisions.
Examples include deciding-
How will we make the product?
Where to locate a new factory?How much capacity do we need?
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Tactical Decisions
These decisions are necessary if the ongoingproduction of goods and services is to satisfymarket demands and provide profits.
Examples include deciding: How many workers do we need? when do we need them ? how much finished-goods inventory to carry
The tactical decisions, in turn, become the operatingconstrains under which operational planning andcontrol decisions are made.
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Operational Decisions
These decisions concern the day-to-day activitiesof workers, quality of products and services,production and overhead costs, and machine
maintenance.
Examples include deciding:What jobs do we work on today or this week?
Whom do we assign to what task?What jobs have priority?
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Hospital ProcessHospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patientsHospital SurgeryMedical Supplies MonitoringEquipment MedicationLaboratories Therapy
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Refrigerator manufacturing
Inputs Processing OutputsRaw material Assemble Refrigerators with
Machines Polishing -good cooling
Tools Fabrication -less consumptionLabor of electricity
Capital - genuine prices
Office -new advanced
features
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MBA Institute
Inputs Processing outputRaw minds lectures -decision
Faculty presentations making
Classrooms assignments -improvedLibrary case studies communication
Lab role plays good analytical
Projector,LCD ability.
Furniture computer skills
stationary
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Functions -
Manufacturer
OperationsFinance/
AccountingMarketing
ManufacturingPurchasing
Production
ControlQualityControl
Manufacturing
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OperationsFinance/
AccountingMarketing
Check
Clearing
Teller
Scheduling
Transactions
ProcessingSecurity
Commercial Bank
1984-1994
T/Maker Co.
Functions-Bank
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Functions Airline
OperationsFinance/
AccountingMarketing
Ground
Support
Flight
Operations
Facility
MaintenanceCatering
Airline