Operations Management
Section 2
By
Pantea Alirezazadeh
Chapter 1
Introduction to Operations Management
Today we’ll address these questions:
What is Operations Management (OM)?
Why should one study OM?
1.
2.

What are 10 decision areas of operations management?
Where are the OM jobs?
What are the changing challenges for the Operations Managers?
How OM is related to productivity?
3.
4.
5.
6.



7.
What are the three basic functions of a firm?
What is the productivity?
How to measure productivity?
What are the measurement problems that occur when one attempts
to measure productivity?
What are five reasons why productivity is difficult to improve in the
service sector?
What is Operations Management?
OM is the set of activities that creates value in
the form of goods and services by
transforming inputs into output.
Example:
Why Should we study OM?

What are the three basic functions of a firm?



Marketing – generates demand
Production/operations – creates the product
Finance/accounting – tracks how well the organization is
doing, pays bills, collects the money
Organizing Charts for an
Service Organizations
and
manufacturing Organization
Continue : Why Should we study OM?
1.
OM is one of three major functions (marketing, finance,
and operations) of any organization and we study how
people organize themselves for productive enterprise.
2.
We want to know how goods and services are
produced.
To understand what operations managers do.
3.
4.
It provides a major opportunity for an organization to
improve its profitability and enhance its service to
society.
What are 10 decision areas of operations
management?
1.
2.
3.
4.
5.
6.
7.
8.
Product Design: What good or service should we offer? (chapter5)
Quality: How to define quality?
(chapter 6 and 6 supp.)
Process: What process will these products require? (chapter 7,7supp.)
Location: Where should we put the facility?
(chapter 8)
Layout: How should we arrange the facility?
(chapter9)
Human Resources :How to provide a reasonable work environment? (10)
Supply Chain Management: should we make or buy this component?(11)
Inventory: How much inventory of each item should we have? (12, 14, 16)
9.
Planning (aggregate and short-term): which job do we perform next? (13, 15)
10.
Maintenance: who is responsible for maintenance? (17)
Where are the OM jobs?



Disciplines in operation part of organizations.
you need to have the knowledge of
accounting, statistics, finance and OM.
Try to take courses in accounting, statistics,
information systems and math.
About 40% of all jobs are in OM.
What are the changing challenges for the
Operations Managers?
How OM is related to productivity?

What is the productivity?
Productivity is the ratio of outputs (goods and services) divided
by one or more inputs (such as labor, capital, or management)
The operations manager’s job is to enhance this
ratio of outputs to inputs.
Example
If units produced = 1000 and labor-hours used is 250
then:
Productivity = units produced / Input Used
Productivity = 1000/250 = 4 units labor-hour
The operations manager’s job is to enhance this ratio of
outputs to inputs.
What are the measurement problems that occur
when one attempts to measure productivity?



precise units of measure may be lacking,
quality may not be consistent,
and exogenous variables may change.
What are five reasons why productivity is difficult
to improve in the service sector?
1.
2.
3.
4.
5.
many services are labor intensive,
they are individually (personally) processed
(the customer is paying for that
service – the hair cut),
it may be an intellectual task performed
by professionals,
it is often difficult to mechanize and
automate, and
often difficult to evaluate for quality.
About Half of the 17-year-olds in the U.S. CANNOT
Correctly Answer Questions of this type
Organization of the Text
The Strategic
Importance of
Operations
1. Introduction to
Operations and
Productivity
2. Operations
Strategy
A. Decision-Making
Tools
Designing the
Operating
System
5. Products and
Services
7. Processes
Strategy
8. Location
9. Layout
3. Project
Management
 Will be covered
 Might be skipped
Managing the
Supply Chain
11. Supply Chain
Management
4. Forecasting
13. Aggregate
Planning
12. Inventory
Management
B. Linear
Programming
16. Just-in-Time and
Lean Production
14. Enterprise
Resource
Planning
15. Scheduling
Ensuring
Quality
6.
Quality
Management
S6. Statistical
Process
Control
D. Waiting Line
Models
10. Human
Resources in
Operations
Management
Assignment




Visit course website
Install Excel OM on your laptop from CD.
Read Chapter 2 and Module A by Jan 29.
Assignment 1 is due to Jan 31.( You will have your first
quiz on Jan 31). I’ll post the first assignment by the end
of this weekend( Jan 22).