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Introduction toOperations Management

Dr. Richard Jerz

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Learning Objectives

• 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

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What is Operations Management?

• Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

• Operations management affects an organization’s ability to compete

• Operations managers plan, design, operate, manage, and control the transformation processes

• Operations managers make decisions

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Operations Management Includes:

• Forecasting• Location and facility layout planning• Capacity planning• Scheduling• Managing inventories• Assuring quality• Motivating employees• Supply chain management• And more . . .

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Organization Overview

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Organization Overview

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Operations

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Example

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Goods and ServicesSteel production

Automobile fabrication

House buildingRoad construction

DressmakingFarming

Auto RepairAppliance repair

Maid ServiceManual car wash

TeachingLawn mowing

Low service contentHigh goods content

High service contentLow goods content

Increasinggoods content

Increasingservice content

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Other Examples?

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Key Decisions of Operations Managers

• What• What resources/what amounts

• When• Needed/scheduled/ordered

• Where• Work to be done

• How• Designed

• Who• To do the work

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Decision Making

• Models• Quantitative approaches• Analysis of trade-offs• Systems approach• Establishing priorities• Ethics

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Using Models for Decisions

• Abstraction of real world• Help understand complex problems• Able to answer what-if’s• Less expensive than real world

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Models

• A model is an abstraction of reality• Physical• Schematic• Mathematical

• Modeling trade-offs• Cost• Information• Understanding• Flexibility

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Modeling Example

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Limitations of Models

• Quantitative information may be emphasized over qualitative

• Models may be incorrectly applied and results misinterpreted

• Nonqualified users may not comprehend the rules on how to use the model

• Use of models does not guarantee good decisions

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Systems Approach

“The whole is greater than the sum of the parts.”

Suboptimi-zation

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Historical Evolution of Operations Management

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• Industrial revolution (~1770)• Eli Whitney, musket (rifle), Interchangeable parts

• Division of labor (~1776)• Adam Smith

• Scientific management (~1900)• Frederick Taylor

• Mass production (~1910-1980)• Henry Ford

• Human relations movement (~1930-60)• Decision models (1915, 1960-70’s)• Influence of Japanese (~1980-1995)• Mass customization (1995-current)

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Recent Trends

• The Internet, e-commerce, e-business• Management technology• Globalization• Management of supply chains• Outsourcing• Agility• Ethical behavior

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The Changing Environment

• Governments• Legal issues• Technology• Labor relations• Information

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Why Study OM?

• To know how goods and services are produced

• To understand what operations managers do• Operations are a costly part of an

organization• We want a job!

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Where are the OM jobs?

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What is the answer?

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