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1. Introduction to Operations Management. Slides prepared by Laurel Donaldson Douglas College. Define the term operations management and identify operations management jobs. Identify the three major functional areas of organizations and describe how they interrelate. - PowerPoint PPT Presentation
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Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
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Slides prepared byLaurel DonaldsonDouglas College
Introduction to Operations Management
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Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
Define the term operations management and identify operations management jobs.
Identify the three major functional areas of organizations and describe how they interrelate.
Describe the scope of operations management, and differentiate between design and operations decisions.
Compare goods versus services.Discuss the operations manager’s job.Describe key aspects of operations mgmt decision making.Briefly describe the historical evolution of operations mgmtIdentify current trends that affect operations management
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Chapter Outline
What is Operations Management (OM)? Three basic functions within
organizations The scope of Operations Management Differentiating goods and services Operations Manager’s job Operations Manager and decision making The historical evolution of Operations
Management Major trends
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LO 1
OM is the management of processes or systems that create goods and/or provide services.
OM is the management of processes or systems that create goods and/or provide services.
What is Operations Management?
Companies use OM to improve: efficiency (minimize cost and time) and effectiveness (achieving intended goals)
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LO 1
OM Activities Airline company (services)
Bicycle factory (goods)
Forecasting
Capacity planning
Scheduling
Managing inventories
Assuring quality
Motivating employees
Where to locate facilities
Detail the following OM activities for each company
What is Operations Management?
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LO 1
Why study Operations Management?
1. A large percentage of a company’s expenses occur in OM area (improvements = more profits)
2. A large number of all jobs are in OM area (purchasing, quality, planning, scheduling, inventory, etc)
3. Activities in all other areas( finance, marketing) are interrelated with OM activities
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LO 2
Three Basic Functions1. Operations: create goods and services2. Finance: provide funds and the economic analysis
of investment proposals3. Marketing: assess customer wants and needs and
communicate them to others
OperationsFinance/
AccountingMarketing
GroundSupport
FlightOperations
FacilityMaintenance
Catering
Airline Company
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LO 2
Three Basic Functions Is OM function adding value during the
transformations process? Is there any overlapping between the main
functions?
FinanceMarketing
Operations
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LO 2
Inputs:LandLabourCapital
Transformation Process
Outputs:GoodsServices
Control
Feedback
FeedbackFeedback
Value Added
Operations function
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LO 2
What is added value?
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LO 2
Types of Operations Operations Examples
Goods Producing Farming, mining, construction,manufacturing, power generation
Storage/Transportation Warehousing, trucking, mailservice, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
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LO 2
Transformation Process at a Food Processor
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LO 2
Transformation Process at a Hospital
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LO 2
Logistics
Accounting
Product Design
Operations
Maintenance
PersonnelPurchasing
ManufacturingEngineering
MIS
Operations Interfaces
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LO 3
The Scope of Operations Management
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LO 3
Decision area Basic question Chapter
Forecasting What will the demand be? 3
Product/ service design What customers want? How to improve products/services? 4
Capacity How much capacity will be needed? 5
Process What processes should be used? 6
Layout What is the best arrangement for the departments? 6
Location What is the best location for our next hotel? 8
Quality How to define quality? How to improve it? 9
Supply Chain Management Which supplier to choose? 11
Inventory How much to order? 12
Aggregate planning How much capacity will be needed over the medium term? 13
JIT systems How to coordinate production and purchasing? 15
Scheduling How to schedule jobs, staff? 16
Which decision is design type and which is operation type?
The Scope of Operations Management
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LO 4
Goods vs. Services
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LO 4
Goods or Service?
TangibleTangible ActAct
Most systems are a blend of both good & service. Service sector accounts for > 70% of jobs in Canada.
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LO 5
The Operations Manager’s Job
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LO 5
Level of Job Satisfaction
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LO 6
Operations Managers and Decision Making
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LO 6
A model is an abstraction of reality.
Models
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LO 6
Quantitative Approaches
•Linear programming
•Queuing techniques
•Inventory techniques
•Project techniques
•Statistical techniques
•Linear programming
•Queuing techniques
•Inventory techniques
•Project techniques
•Statistical techniques
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LO 6
Analysis of Trade-Offs
Decision on amount of inventory to stock Increased cost of holding inventory
vs.Level of customer service
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LO 6
Establishing PrioritiesPareto Phenomenon
• A few factors account for a high percentage of the occurrence of some event(s).
• 80/20 Rule - 80% of problems are caused by 20% of the activities.
Pareto Phenomenon
• A few factors account for a high percentage of the occurrence of some event(s).
• 80/20 Rule - 80% of problems are caused by 20% of the activities.
How do we identify the vital few?
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LO 6
Ethical Issues
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The Historical Evolution of OM
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Trends in Business
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LO 8
Supply Chain Supply Chain: A sequence of activities and organizations
involved in producing and delivering a good or service Supply Chain: A sequence of activities and organizations
involved in producing and delivering a good or service
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Learning Checklist Define the term operations management and
describe what an operation manager might do. Identify the three major functional areas of
organizations and describe how they interrelate. Differentiate between design and operations
decisions. Compare goods versus services. Describe key aspects of operations management
decision making. Briefly describe the historical evolution of operations
management. Identify current trends that affect operations
management.30
