1-1. McGraw-Hill/Irwin

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1 1-1

2 1-2 o Introduction to Production and Operation Management o Competiveness,Strategy and Production o Forecasting o Product and service design o Process selection and facility layout o Design of work System o Location planning and analysis o Management of quality o JIT and lean systems

3 1-3 Chapter 1

4 1-4 o Define the term Production and Operation Management o Identify the three major functional areas of organizations and describe how they interrelate o Compare and contrast service and manufacturing operations o Describe the operations function and the nature of the operations manager s job o Identify the two major aspects of process management o Describe the key aspects of operations management decision making

5 1-5 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 Business Organization: typically have three basic functional areas, as the following figure represents Organization Finance Operations Marketing

6 1-6 Introduction to Operations Management Operations Interfaces Industrial Engineering Maintenance MIS Distribution Operations Public Relations Purchasing Accounting Personnel

7 1-7 Introduction to Operations Management The scope of Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities And more... Supply Chain a sequence of activities and organizations involved in producing and delivering a good or service Suppliers suppliers Direct suppliers Producer Distributor Final Customers

8 1-8 Introduction to Operations Management Business Operations Overlap Operations Marketing Finance The creation of goods or services involves transforming/ converting of inputs into outputs; as the next figure represents:

9 1-9 The Transformation Process Value-Added Describe the difference between the cost of inputs and the value or price of outputs Inputs Land Labor Capital Information Feedback Transformation / Conversion Process Control Feedback Feedback Outputs Goods Services Ideas The comparison of feedback against previously established standards to determine if corrective action is needed. Measurements taken at various points in the transformation process

10 1-10 Why Study OM? Every aspect of business revolves around 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

11 1-11 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

12 1-12 Introduction to Operations Management Goods-Service Continuum Steel production Automobile fabrication Low service content High goods content House building Road construction Dressmaking Farming Auto Repair Appliance repair Increasing goods content Increasing service content High service content Low goods content Maid Service Manual car wash Teaching Lawn mowing

13 1-13 Introduction to Operations Management Manufacturing or Service? Tangible Act Key Differences Customer contact Uniformity of input Measurement of productivity Labor content Uniformity of output Quality assurance These differences are beginning to fade in many cases

14 1-14 Introduction to Operations Management Manufacturing vs Service Characteristic Output Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Opportunity to correct quality problems High Manufacturing Tangible Low High Low High Easy High Service Intangible High Low High Low Difficult Low

15 1-15 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?

16 1-16 Role of the Operations Manager The Operations Function consists of all activities directly related to producing goods or providing services. A primary function of the operations manager is to guide the system by decision making. System Design Decisions System Operation Decisions System Design Capacity Location Arrangement of departments Product and service planning Acquisition and placement of equipment System operation Personnel Inventory Scheduling Project management Quality assurance

17 1-17 Introduction to Operations Management Responsibilities of Operations Management Planning Capacity Location Products & services Make or buy Layout Projects Scheduling Controlling Inventory Quality Organizing Degree of centralization Subcontracting Staffing Hiring/laying off Use of Overtime Directing Incentive plans Issuance of work orders Job assignments

18 1-18 Introduction to Operations Management Systems Approach The whole is greater than the sum of the parts. Suboptimization Beneficial in decision making Consider the impact on all parts of the system

19 1-19 Readings & Assignment * Read chapter 1; Introduction to operations management (pp.1-20) * For the week (starting 16/02/2013) tutorial session; read chapter 1, P (case study: Kabab-ji Grill) for discussion in the session. For the lecture on 24/02/2013 (you need to submit the following assignment: Answer the following questions: 1- Briefly describe the term operations management? 2- Identify the three major functional areas of business organizations and briefly describe how they interrelate? 3- Describe the operations function and the nature of the operations manager s job?