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Introduction to OperationsManagement

McGraw-Hill/IrwinCopyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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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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Goods are physical items that include raw materials, parts,

subassemblies, and final products.

Automobile

Computer

OvenShampoo

Services are activities that provide some combination of time, location,

form or psychological value.Air travel

Education

Haircut

Legal counsel

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Supplierssuppliers

Directsuppliers

Producer Distributor FinalCustomers

Supply Chain a sequence of activities and

organizations involved in producing and delivering a

good or service

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Operations FinanceMarketing

Organization

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Inputs:

LandLabor

Capital

Information

Outputs:

GoodsServices

Transformation/Conversion

Process

Control

Measurement

and Feedback

Measurement

and Feedback

Measurement

and Feedback

Value-Added

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. 1-7

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Automobile Assembly, Steelmaking

Products are typically neither purely service- or purely goods-based.

Goods Services

Home Remodeling, Retail Sales

Computer Repair, Restaurant Meal

Songwriting, Software Development

Surgery, Teaching

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TangibleAct-Oriented

Goods Services

Manufacturing and Service Organizations differ chiefly because

manufacturing is goods-oriented and service is act-oriented.

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1. Degree of customer contact

2. Uniformity of input

3. Labor content of jobs

4. Uniformity of output

5. Measurement of productivity6. Production and delivery

7. Quality assurance

8. Amount of inventory9. Evaluation of work

10. Ability to patent design

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1. Jobs in services are often less structured than in manufacturing

2. Customer contact is generally much higher in services

compared to manufacturing

3. In many services, worker skill levels are low compared to those

of manufacturing employees

4.Services are adding many new workers in low-skill, entry-levelpositions

5. Employee turnover is high in services, especially in low-skill

jobs.

6. Input variability tends to be higher in many serviceenvironments than in manufacturing.

7. Service performance can be adversely affected by many factors

outside of the managers control.

(e.g., employee and customer attitudes)1-11

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Process: 1 or more actions that transform inputs into outputs

Three Categories of Business Processes:

Upper-management

processes

These govern the operation of the

entire organization.

Operational processes These are core processes that

make up the value stream.Supporting processes These support the core processes.

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Supply Demand>

Supply Demand