Chapter 1: Introduction to OM
Assignments
Hazel Case, Page 38
1-1
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
1-2
Learning Objectives
Differentiate between design and operation
of production systems
Describe the key aspects of operations
management decision making
Briefly describe the historical evolution of
operations management
Identify current trends that impact operations
management
1-3
Operations Management
Campus Club Cupcakes
How long does a student wait?
Number of orders in a 4.5 hr shift
Risks
Possible improvements
1-4
The Organization
Figure 1.1
The Three Basic Functions
Organization
Finance
Operations
Marketing
1-5
Value-Added & Product
Packages
Value-added is the difference between the
cost of inputs and the value or price of
outputs.
Product packages are a combination of
goods and services.
Product packages can make a company
more competitive.
1-6
Value-Added Process
Figure 1.4
The operations function involves the conversion of
inputs into outputs
Value added
Inputs
Land
Labor
Capital
Transformation/
Conversion
process
Outputs
Goods
Services
M&F
Control
M&F
M&F
1-7
Goods-service Continuum
Figure 1.5
Goods
Service
Surgery, teaching
Song writing, software development
Computer repair, restaurant meal
Automobile Repair, fast food
Home remodeling, retail sales
Automobile assembly, steel making
1-8
Production of Goods vs. Providing
Services
Production of goods – tangible output
Delivery of services – an act
Service job categories
Government
Wholesale/retail
Financial services
Healthcare
Personal services
Business services
Education
1-9
Key Differences
1. Degree of customer contact
2. Labor content of jobs
3. Uniformity of inputs and outputs
4. Measurement of productivity
5. Quality assurance
6. Inventory
7. Wages
8. Ability to patent
1-10
Goods vs Service
Characteristic
Goods
Customer contact
Uniformity of input
Labor content
Uniformity of output
Output
Measurement of productivity
Opportunity to correct problems
Inventory
Evaluation
Patentable
Service
1-11
OM Professional Societies and
Certification Opportunities
ASCM (www.apics.org)
CPIM, CSCP
ASQ (www.asq.org)
CQE, CRE, CQM, Six sigma
PMI (www.pmi.org)
PMP
CSCMP (www.cscmp.org)
Informs (Informs.org)
CAP
1-12
Quantitative Approaches
• Linear programming
• Queuing techniques
• Inventory models
• Project models
• Statistical models
1-13
Analysis of Trade-Offs
Decision on the amount of inventory to stock
Increased cost of holding inventory
Vs.
Level of customer service
1-14
Pareto Phenomenon
• A few factors account for a high
percentage of the occurrence of some
event(s).
• 80/20 Rule - 80% of problems are caused
by 20% of the activities.
How do we identify the vital few?
1-15
Ethical Issues
Financial statements
Worker safety
Product safety
Quality
Environment
Community
Hiring/firing workers
Closing facilities
Worker’s rights
1-16
Hazel Case, Page 38
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1-17