Operations Management Ch 1

Operations
Operations is that part of a business organization that is responsible for producing goods and/or services.
Goods
physical items that include raw materials, parts, subassemblies such as motherboards that go into computers, and final products such as cell phones and automobiles.
Service
are activities that provide some combination of time, location, form, or psychological value
Result of having excess supply or excess capacity
High cost and waste of materials.
Result of having too little supply
lost opportunity and possible customer dissatisfaction
The ideal situation for a business organization
supply and demand match
The three basic functional areas of a business
finance, marketing, and operations
Responsibility of the Financial Sector
securing financial resources at favorable prices and allocating those resources throughout the organization, as well as budgeting, analyzing investment proposals, and providing funds for operations.
Responsibility of the Marketing Sector
responsible for assessing consumer wants and needs, and selling and promoting the organization’s goods or services.
Responsibility of the Operations Sector
Acts as the core of a business and is responsible for producing the goods or providing the services offered by the organization
operations management
the management of systems or processes that create goods and/or provide services.
supply chain
the sequence of organizations—their facilities, functions, and activities—that are involved in producing and delivering a product or service. The sequence begins with basic suppliers of raw materils and extends all the way to the final customer
What is used to ensure that the desired outputs are obtained
measurement
Value-added
the term used to describe the difference between the cost of inputs and the value or price of outputs.
Factors that affect the design and management of operations systems.
affect the design and management of operations systems.
What are the two line functions of a business and its supporting functions
Operations and sales are the two line functions in a business organization. All other functions—accounting, finance, marketing, IT, and so on—support the two line functions.
Process
consists of one or more actions that transform inputs into outputs. In essence, the central role of all management is process management
The three categories of business processes
Upper-management processes, operational processes, supporting processes
Upper-management processes
These govern the operation of the entire organization. Examples include organizational governance and organizational strategy.
Operational processes
These are the core processes that make up the value stream. Examples include purchasing, production and/or service, marketing, and sales.
Supporting Processes
These support the core processes. Examples include accounting, human resources, and IT (information technology).
Sources of Variation
Variety of goods and services being offered, structural variation in demand, Random variation, Assignable variation.. Explain each.
Results of variations
result in additional cost, delays and shortages, poor quality, and inefficient work systems. Poor quality and product shortages or service delays can lead to dissatisfied customers and can damage an organization’s reputation and image.
Activities included in the operations management function
forecasting, capacity planning, scheduling, managing inventories, assuring quality, motivating employees, deciding where to locate facilities, and more.
Primary function of the operations manager
to guide the system by decision making. Certain decisions affect the design of the system, and others affect the operation of the system.
System Design Decisions
Involves decisions that relate to system capacity, the geographic location of facilities, arrangement of departments and placement of equipment within physical structures, product and service planning, and acquisition of equipment.
Systems operation
involves management of personnel, inventory planning and control, scheduling, project management, and quality assurance. These are generally tactical and operational decisions. Feedback on these decisions involves measurement and control
Other areas that are part of the operations function
purchasing, industrial engineering, distribution, and maintenance.
Explain the what, when, where and how questions that the operations manager must consider.
What: What resources will be 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? When is corrective action needed?

Where: Where will the work be done?

How: How will the product or service be designed? How will the work be done (organization, methods, equipment)? How will resources be allocated?

Who: Who will do the work?

The approaches to decision making in by Operations Managers
Performance metrics, systems approach, trade-off analysis, model, quantitative
Model
an abstraction of reality, a simplified representation of something.
Benefits of Models
1.Are generally easy to use and less expensive than dealing directly with the actual situation.

2.Require users to organize and sometimes quantify information and, in the process, often indicate areas where additional information is needed.

3.Increase understanding of the problem.

4.Enable managers to analyze what-if questions.

5.Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem.

6.
Enable users to bring the power of mathematics to bear on a problem.

Limitations of the model approach
1.Quantitative information may be emphasized at the expense of qualitative information.

2.Models may be incorrectly applied and the results misinterpreted. The widespread use of computerized models adds to this risk because highly sophisticated models may be placed in the hands of users who are not sufficiently knowledgeable to appreciate the subtleties of a particular model; thus, they are unable to fully comprehend the circumstances under which the model can be successfully employed.

3.The use of models does not guarantee good decisions.

The different types of Models
Physical models look like their real-life counterparts. Examples include miniature cars, trucks, airplanes, toy animals and trains, and scale-model buildings. The advantage of these models is their visual correspondence with reality.

Schematic models are more abstract than their physical counterparts; that is, they have less resemblance to the physical reality. Examples include graphs and charts, blueprints, pictures, and drawings. The advantage of schematic models is that they are often relatively simple to construct and change. Moreover, they have some degree of visual correspondence.

Mathematical models are the most abstract: They do not look at all like their real-life counterparts. Examples include numbers, formulas, and symbols. These models are usually the easiest to manipulate, and they are important forms of inputs for computers and calculators.

System
a set of interrelated parts that must work together.
Pareto phenomenon
a few factors account for a high percentage of the occurrence of some event(s)
Evolution of Operations Management
Industrial revolution, Scientific Management, Human relations management, Decision Models and Management Science, The Influence of Japanese Manufacturers
Key issues of today’s business operations
Economic conditions, innovating, quality problems, risk management, competing in global economy, environmental concerns, ethical problems, need to manage the supply chain.
Core competencies
The special attributes or abilities that give an organization a competitive edge.
competitiveness
How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services.
Environmental Scanning
The monitoring of events and trends that present threats or opportunities for a company.
Goals
Provide detail and scope of the mission.
mission
The reason for the existence of an organization
mission statement
states the purpose of the business
Operations Strategy
The approach, consistent with the organization strategy, that is used to guide the operations function.
Order Qualifiers
Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential for purchase.
Order Winners
Characteristics of an organization’s goods or services that cause it to be perceived as better than the competition.
productivity
A measure of the effective use of resources, usually expressed as the ratio of output to input.
quality based strategy
Strategy that focuses on quality in all phases of an organization
strategies
Plans for achieving organizational goals.
SWOT
Analysis of strengths, weaknesses, opportunities, and threats
Tactics
The methods and actions taken to accomplish strategies
Time based strategy
Strategy that focuses on reduction of time needed to accomplish tasks.