Chapter 1 Introduction to Operation Management

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
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
Supply Chain
a sequence of activities and organizations involved in producing and delivering a good or service
The Transformation Process
Input – Transformation-outputs
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.
Basic Functions of the Business Organization
Marketing, Finance, and Operations

Finance & Operations
-Budgeting
-Economic analysis of investment proposals
-Provision of funds

Marketing & Operations
Demand data
Product and service design
Competitor analysis
Lead time data

Process
one or more actions that transform inputs into outputs
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
Role of the Operations Manager
The Operations Function consists of all activities directly related to producing goods or providing services.
value stream
types of thing that adds value to customer
ex) sauce fresh vegs, putting lids on the cans
A primary function of the operations manager is to guide the system by decision making.
System Design Decisions
System Operation Decisions
System Design
Capacity
Facility location
Facility layout
Product and service planning
Acquisition and placement of equipment
System Operation
These are generally tactical and operational decisions
Management of personnel
Inventory management and control
Scheduling
Project management
Quality assurance
Operations managers spend more time on system operation decision than any other decision area
They still have a vital stake in system design
Typical operations decisions include:
What: What resources are needed, and in what
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?
Model
an abstraction of reality; a simplification of something.
Modeling is a key tool used by all decision makers
Benefits of Models
Models are generally easier to use and less expensive than dealing with the real system
Require users to organize and sometimes quantify information
Increase understanding of the problem
Enable managers to analyze “What if?” questions
Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem
Enable users to bring the power of mathematics to bear on a problem.
Model Limitations
Quantitative information may be emphasized at the expense of qualitative information
Quantitative Approaches
A decision making approach that frequently seeks to obtain a mathematically optimal solution
Pareto Phenomenon
few factors account for high percentage of occurrence’s for some events
Key Issues for Operations Managers Today
Economic conditions
Innovating
Quality problems
Risk management
Competing in a global economy
Supply Chain Issues
The need to improve operations
Increasing levels of outsourcing
Increasing transportation costs
Competitive pressures
Increasing globalization
Increasing importance of e-business
The complexity of supply chains
The need to manage inventories