Introduction to Operations
Management
Ch 1. Introduction to Operations
Management
Hansoo Kim (金翰秀), Ph.D
Dept. of Management Information Systems,
YUST
1
Announcement

Class Homepage
 http://yustOM.wikispaces.com/

Good Material for studying OM,
"The Encyclopedia of Operations Management Terms"
 You can download it from the Class Homepage


About Textbook?
Please use “Useful websites” for studying OM
 You can find some links from the Class Homepage
2
What you should have done!
 Read Chapter 1 and 2 (Text Book?)
 Play with MS-Excel..
3
OM Overview
Class Overview
(Ch. 0)
X
Operations,
Productivity,
and Strategy
(Ch. 1, 2)
Project
Management
(Ch. 17)
Mgmt of Quality/
Six Sigma Quality
(Ch. 9, 10)
Queueing/
Simulation
(Ch. 18)
Supply Chain
Management
(Ch 11)
Demand Mgmt
Forecasting
(Ch 3)
Aggregated
Planning
(Ch. 13)
Inventory
Management
(Ch. 12)
Strategic
Capacity
Planning
(Ch. 5, 5S)
Location Planning
and Analysis
(Ch. 8)
MRP & ERP
(Ch 14)
Process
Selection/
Facility
Layout; LP
(Ch. 6, 6S)
JIT &
Lean Mfg System
(Ch. 15)
Term
Project
Today’s Outline
 What is OM?


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Types of OM Problem and Models
Why should study OM?
Three Major Functions of Organization
Value-added process
Goods vs. Service
Scope of Operations Management
History of Operations Management
Trends in Business
Learning Objectives
1.
2.
3.
4.
5.
6.
7.
8.
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.
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 in business that impact operations
management.
Question?

Wal-Mart


Boeing


In the late 1970s, Wal-Mart was a niche marketer, with about 200
stores, mostly in the South. At the time, Sears, JC Penney, and
Kmart dominated the retail market. Over the years, Wal-Mart
gained market share at the expense of the previous market
leaders, and it has now become the largest and most profitable
retailer in the world!
In the 1990s, the Boeing Company ran into trouble when it could
not meet production deadlines. As a result, Boeing lost some
orders, which had a negative impact on earnings and its stock
price.
Why do some companies thrive while others struggle or fail?

There are a variety of reasons, to be sure. However, an important
key in a company’s success or failure is how well it manages its
operations.
Dell.com
Why??
How??
9
What is OM(运作管理)
 Operations Management (OM):



the set of activities(活动) that creates value(价值) in
the form of goods(商品) and services(服务) by
transforming inputs into outputs
What activities (어떤 活动이 있는가)?
How to evaluate (어떻게 评价할 것인가)?
We need evaluation measures – Productivity!!
(生产率)
What are the better activities?
(어떤 활동을 어떻게 하면 생산성이 좋을까?)
 Production(生产):

Creating goods and services
10
Organizational Functions
(企业组织的职能)
生产
 Essential functions:
 Marketing (营销)
 Generates demands (需求)
 Gets customers（顾客）
企业组织
三个
基本职能
营销
财务/会计
 Production/Operations (生产/运作)
 Creates product or service
 Procurement (获取) of required material
 Finance(财务)/Accounting(会计)
 Obtains funds, pays bills, collects money
11
Operations:
Value-added(增值) Process,
Transformation Process
The operations function involves
the conversion of inputs into outputs
Input-Transformation-Output
Relationships for Typical Systems
Primary
Transformation
Functions
Typical Desired
Output
System
Primary
Inputs
Hospital
Patients
MDs, nurses, medical
supplies, equipment
Health care
Healthy individuals
Restaurant
Hungry
Customer
Food, chef, wait staff,
environment
Well-prepared, wellserved food; agreeable
environment
Satisfied customers
Automobile
factory
Sheet steel,
engine parts
Tools, equipment,
workers
Fabrication and assembly
of cars
High-quality cars
Collage or
university
High school
graduates
Teachers, books,
Classrooms
Teaching knowledge and
skills
Educated individuals
Department
store
Shoppers
Displays, stocks of
goods, sales clerks
Attract shoppers,
promote products, fill
orders
Sales to satisfied
customers
Distribution
Center
Stock keeping
units (SKUs)
Storage bins, stock
pickers
Storage and
redistribution
Fast delivery,
availability of SKUs
Resources
Operations are not only for manufacturing!!!
13
Major Service Jobs
(federal, state, local).
Goods vs.Government
Service
Wholesale/retail (clothing, food, appliances,
stationery, toys, etc.).
Financial services (banking, stock brokerages,
insurance, etc.).
Health care (doctors, dentists, hospitals, etc.).
Personal services (laundry, dry cleaning,
hair/beauty, gardening, etc.).
Business services (data processing, e-business,
delivery, employment agencies, etc.).
Education (schools, colleges, etc.).
READING!! (Text book)
 Why manufacturing matters
 The challenges of managing service
U.S. manufacturing versus service
employment, 1940-2005
Why?
Productivity and Outsourcing
Decline in Manufacturing
(制造业) Jobs
 Productivity
 Increasing productivity allows companies to
maintain or increase their output using fewer
workers
 Outsourcing
 Some manufacturing work has been
outsourced to more productive companies
Why Manufacturing Matters
 Over 18 million workers in manufacturing jobs
 Accounts for over 70% of value of U.S. exports
 Average full-time compensation about 20%
higher than average of all workers
 Manufacturing workers more likely to have
benefits
 Productivity growth in manufacturing in the last 5
years is more than double U.S. economy
Why Manufacturing Matters
 More than half of the total R&D performed is in
the manufacturing industries
 Manufacturing workers in California earn an
average of about $25,000 more a year than
service workers
 When a California manufacturing job is lost, an
average of 2.5 service jobs are lost
Challenges of Managing
Services
 Service jobs are often less structured than
manufacturing jobs
 Customer contact is higher
 Worker skill levels are lower
 Services hire many low-skill, entry-level workers
 Employee turnover is higher
 Input variability is higher
 Service performance can be affected by worker’s
personal factors
Why Should Study OM?

4 Reasons




OM is one of three major functions of any organization,
and it is integrally related to all the other business
functions
We want to know how goods(商品) and services（服务）
are produced
We study OM to understand what operations（运作）
managers do. By understanding, we can develop
the skills necessary to become such a OM Expert
OM is such a costly part of an organization
About 40% of all jobs are in OM
20
Scope of Operations
Management
Class Overview
(Ch. 0)
Operations,
Productivity,
and Strategy
(Ch. 1, 2)
Project
Management
(Ch. 17)
Mgmt of Quality/
Six Sigma Quality
(Ch. 9, 10)
Queueing/
Simulation
(Ch. 18)
Supply Chain
Management
(Ch 11)
Demand Mgmt
Forecasting
(Ch 3)
Aggregated
Planning
(Ch. 13)
Inventory
Management
(Ch. 12)
Strategic
Capacity
Planning
(Ch. 5, 5S)
Location Planning
and Analysis
(Ch. 8)
MRP & ERP
(Ch 14)
Process
Selection/
Facility
Layout; LP
(Ch. 6, 6S)
JIT &
Lean Mfg System
(Ch. 15)
Term
Project
21
Model Based
Decision-Making
Physical model
Schematic model
Mathematical model
Assumptions
Real World
Problem
Modeling
Find
Solution
Feed-back
?
Solution
for RW
Problem
Model
Interpretation
Exact or
Heuristic method
Solution
for Model
Experiences/
Intuition
What is Trade-off (절충) ?
What is System?
What is Pareto-Phenomenon?
Example: Product Mix(产品组合)
(Product mix decision making)
Smart furniture company manufactures two products, Chair and Table.
The profit of selling a Chair is $10.00 and that of Table is $20.00. To make
a Chair, it requires 5 units of wood, 3 units of steel and 20 units of nails,
and to make a Table, it requires 10 units of wood, 10 units of steel, and
10 units of nail. Suppose that the Smart furniture has 1000 units of
wood, 300 units of steel, and 1000 units of nail, how many Chairs
and Tables should be produced to make maximum profits?
Wood: 1000 units
Wood: 5 units
Steel: 3 units
Nail: 20 units
$10.00
Wood: 10 units
Steel: 10 units
Nail: 10 units
$20.00
Steel: 300 units
Nail: 1000 units
23
Example: Forecasting（预测）
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Demand
800
1400
1000
1500
1500
1500
1300
1800
1700
1300
1700
1700
1500
2300
2300
2000
1700
1800
2200
1900
???
Past Demand for Chairs, Smart Furniture
2500
2000
Demand
Week
1500
1000
500
0
1 2
3
4 5
6
7 8
9 10 11 12 13 14 15 16 17 18 19 20
W eek
Demand > Products --- Lost Sales
Demand < Products --- Inventory cost
What is demand in 21st week?
24
Example: Waiting Line (Queueing)
（排队）
Which bank has
better performance?
Average waiting time
should be less than 25
minutes !!!
25
Example: Inventory（库存）
 Price Break
 Consider the following case, where
 D=10,000 units (annual demand)
 S= $20 to place each order
 i = 20% percent of cost (annual carrying cost,
storage, interest, obsolescence, etc.)
 C=Cost per unit (according to the order size;
 0 ~ 499, $5.00 per unit
 500~999, $4.50 per unit
  1000, $3.9 per unit
 Which quantity should be ordered?
26
Operational Decisions
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Project Management（项目管理）
Process Analysis
Product Design and Process Selection
Facility Layout（设施布置）
Waiting Line Management（等候队列）
Quality Management and Control（质量管理和控制）
Supply Chain Management（供应链管理）
Just-In-Time（准是生产） and Lean Manufacturing（精生产益）
System
Forecasting（预测）
Aggregate Production Planning（综合计划）
Inventory Control（库存控制）
Material Requirements Planning (MRP)
Enterprise Resource Planning (ERP)
Operation Scheduling
27
History of Operations
Management
28
Eli Whitney
Born 1765; died 1825
In 1798, received government
contract to make 10,000
muskets
 Showed that machine tools
could make standardized parts
（标准化零件） to exact
specifications
 Musket parts could be used in
any musket


© 1995 Corel Corp.
29
Frederick W. Taylor



Born 1856; died 1915
Known as ‘father of scientific
management’（科学管理）
In 1881, as chief engineer for
Midvale Steel, studied how tasks
were done


Began first motion & time studies
Created efficiency principles
© 1995 Corel Corp.
30
Taylor: Management Should Take
More Responsibility for




Matching employees to right job
Providing the proper training
Providing proper work methods and tools
Establishing legitimate incentives for work
to be accomplished
31
Maslow’s Hierarchy of Needs
1.
2.
3.
4.
5.
자아실현 욕구
최상의 욕구로서 앞 단계의 모든 욕
구가 충족 될 때에 나타난다. 자신의
재능, 능력, 잠재력 등을 충분히 발
휘하기 위해 노력한다.
자기 존중 욕구
능력, 신뢰감, 개인의 힘, 적합성, 성
취, 독립, 자유, 명성, 인식, 수용, 주
목, 지위, 평판
애정 소속 욕구
사랑하고, 사랑을 받고, 집단에 소속
되어서 집단의 일원으로서 의미를
찾으려 하는 욕구
안전 욕구
개인의 환경 내에서 확실성, 정돈,
조직, 예측성 등을 보장받고자 하는
욕구
생리 욕구
인간의 가장 기본적 욕구로서 음식
물, 물, 산소, 잠, 성, 추위나 더위로
부터 보호 등
32
X이론, Y이론

1960년대, D.맥그레거에 의하면 경영자나 관리자는 종업원을 대하는 관점이 경험을
통하거나 또는 타성적인 속단에서 보통 다음과 같은 인간관을 가진다고 하였다.
① 인간은 선천적으로 일을 싫어하며, 가능한 한 일을 하지 않고 지냈으면 한다. ② 기
업내의 목표달성을 위해서는 통제 ·명령 ·상벌이 필요하다. ③ 종업원은 대체로 평범
하며, 자발적으로 책임을 지기보다는 명령받기를 좋아하고 안전제일주의의 사고 ·행
동을 취한다. 맥그레거는 이 3가지를 X이론이라 하고, 이는 명령통제에 관한 전통적
견해이며 낡은 인간관이라고 비판하였다.
그는 또 이러한 인간관에 입각한 조직원칙 ·관리기법으로는 새로운 당면문제나 목표
달성을 위해 조직의 총력을 결집하는 행동을 바라기 어렵다고 하면서, X이론을 대신
할 새로운 인간관으로서 다음과 같은 Y이론을 제창하였다.
① 오락이나 휴식과 마찬가지로 일에 심신을 바치는 것은 인간의 본성이다. ② 상벌만
이 기업목표 달성의 수단은 아니다. 조건에 따라서 인간은 스스로 목표를 향해 전력을
기울이려고 한다. ③ 책임의 회피, 야심의 결여, 안전제일주의는 인간의 본성이 아니
다. ④ 새로운 당면문제를 잘 처리하는 능력은 특정인에게만 있는 것은 아니다. ⑤ 오
히려 현재 기업 내에서 인간의 지적 능력이 제대로 활용되지 않고 있을 가능성이 많다.
이와 같은 Y이론은 인간의 행동에 관한 여러 사회과학의 성과를 토대로 한 것인데, 이
러한 사고방식을 가진다면, 종업원들은 자발적으로 일할 마음을 가지게 되고, 개개인
의 목표와 기업목표의 결합을 꾀할 수 있으며, 능률을 향상시킬 수 있다고 보았다.
Naver 백과사전, http://100.naver.com/100.php?id=111325
33
Frank & Lillian Gilbreth





Frank (1868-1924); Lillian
(1878-1972)
Husband-and-wife engineering
team (부부공학팀)
Further developed work
measurement (작업측정)
methods
Applied efficiency methods to
their home & 12 children!
16-THERBLIG Symbol



Fundamental motions of hands of
a worker.
Motion Study
Pioneer of “Ergonomics”
What is Ergonomics?
34
THERBLIG（基本元素）

Therbligs: The Keys to
Simplifying Work
Therbligs comprise a
system for analyzing the
motions involved in
performing a task. The
identification of individual
motions, as well as
moments of delay in the
process, was designed to
find unnecessary or
inefficient motions and to
utilize or eliminate even
split-seconds of wasted
time. Frank and Lillian
Gilbreth invented and
refined this system, roughly
between 1908 - 1924.
35
Henry Ford



Born 1863; died 1947
In 1903, created Ford
Motor Company
In 1913, first used
moving assembly line
to make Model T



‘Make them all alike!’
Unfinished product
moved by conveyor
past work station
Paid workers very well for 1911 ($5/day!)
Fordism: “the mass production of standardized goods, using
dedicated machines and moving assembly lines, employing unskilled
and semi-skilled labor in fragmented jobs, with tight labor discipline, in
large factories.”
36
W. Edwards Deming



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

Born 1900; died 1993
Engineer & physicist
Credited with teaching Japan
quality control methods in postWW2
Used statistics（统计学） to
analyze process
His methods involve workers in
decisions
Refer to
http://www.lii.net/deming.html
37
Trends in Business







The Internet, e-commerce, and e-business
Management of technology
Globalization
Management of supply chains
Outsourcing
Agility
Ethical behavior
Management of Technology
 Technology: The application of scientific
discoveries to the development and
improvement of goods and services
 Product and service technology
 Process technology
 Information technology
Management of Supply Chain
Supply Chain: A
sequence of activities
and organizations
involved in producing
and delivering a good or
service
Summary




Operations management is responsible for producing goods and providing
services. As such, it is the core function of every business organization.
Operations management plans and coordinates the use of the
organization’s resources to convert inputs into outputs.
Operations decisions involve design decisions and operating decisions.
Design decisions are strategic; they relate to capacity planning, product
design, process design, layout of facilities, and selecting locations for
facilities. Operating decisions relate to quality assurance, scheduling,
inventory management, and project management.
In for-profit organizations, effective operations management can lead to
higher productivity, lower costs, higher quality, and other competitive
advantages, and increased shareholder wealth. In not-for-profit
organizations, effective operations management can lead to lower costs,
higher levels of customer service, and more efficient use of resources.
The chapter also presents a brief overview of the historical evolution of
operations management and it ends with a list of strategic issues that are
currently high priority for business organizations. At the top of that list are
the Internet and e-business, outsourcing, supply chain management,
management of technology, and agility.
Key Terms








Agility（敏捷）: The ability of an organization to respond quickly
to demands or opportunities.
Craft production（工艺生产）: System in which highly skilled
workers use simple, flexible tools to produce small quantities of
customized goods.
Division of labor（劳动力分工）: The breaking up of a production
process into small tasks, so that each worker performs a small
portion of the overall job.
E-business（电子商务）: Use of the Internet to transact business.
E-commerce: Consumer-to-business transactions.
Interchangeable parts（通用件）: Parts of a product made to
such precision that they do not have to be custom fitted.
Lead time（周期）: The time between ordering a good or service
and receiving it.
Lean production（精益生产）: System that uses minimal amounts
of resources to produce a high volume of high-quality goods with
some variety.
Key Terms










Mass production（大量生产）: System in which low-skilled workers use
specialized machinery to produce high volumes of standardized goods.
Model（模型）: An abstraction of reality; a simplified representation of
something.
Operations management: The management of systems or processes
that create goods and/or provide services.
Outsourcing: Obtaining a product or service from outside the
organization.
Pareto phenomenon（ 柏拉图 现象）: A few factors account for a high
percentage of the occurrence of some event(s).
Six sigma: A process for reducing costs, improving quality, and
increasing customer satisfaction.
Supply chain: A sequence of activities and organizations involved in
producing and delivering a good or service.
System: A set of interrelated parts that must work together.
Technology: The application of scientific discoveries to the
development and improvement of goods and services.
Value-added（增值）: The difference between the cost of inputs and
the value or price of output
Introduction to Operations
Management
Ch. 2. Competitiveness, Strategy,
and Productivity
Hansoo Kim (金翰秀), Ph.D
Dept. of Management Information Systems, YUST
44
Learning Objectives
1.
2.
3.
4.
5.
6.
7.
8.
List and briefly discuss the primary ways that business
organizations compete.
List five reasons for the poor competitiveness of some
companies.
Define the term strategy and explain why strategy is
important for competitiveness.
Contrast strategy and tactics.
Discuss and compare organization strategy and operations
strategy, and explain why it is important to link the two.
Describe and give examples of time-based strategies.
Define the term productivity and explain why it is important
to organizations and to countries.
List some of the reasons for poor productivity and some
ways of improving it.
Competitiveness (경쟁력,竞争力)
 How effectively an organization meets the wants
and needs of customers relative to others that
offer similar goods or services

한 기업이 유사 제품과 서비스를 제공하는 다른 기업에
비해 효과적으로 고객의 필요와 요구를 충족시켜 주는
능력
 An important factor in determining whether a
company prospers, barely gets by, or fails.

한 기업이 성공할 것인가? 현상을 유지할 것인가? 혹은
실패할 것인가를 결정짓는 중요한 요인
Mission/Strategy/Tactics
使命
/
战略
/
策略
Mission(使命):
The purpose or rationale for an
organization’s existence
(조직의 존재 목적 혹은 근거)
Mission Statement
Strategy(战略):
How an organization expects to
achieve its missions and goals
Tactics (策略)
The methods and
actions used to
accomplish
strategies
Strategy Example
Example 1
Rita is a high school student. She would like to have a
career in business, have a good job, and earn enough
income to live comfortably
Mission:
Goal:
Strategy:
Tactics:
Operations:
Live a good life
Successful career, good income
Obtain a college education
Select a college and a major
Register, buy books, take
courses, study, graduate, get job
Achieving Competitive Advantage
through Operations
 Competitive Advantage (竞争优势):

The creation of a unique advantage over competitors
 Competing on Differentiation (差别化竞争)


To distinguish the offerings of the organization in any
way that the customer perceives as adding value
Differentiation is concerned with providing uniqueness
 Competing on Cost (价格竞争)
 Competing on Response (时间竞争)
Better, Cheaper, Faster!!!
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Businesses Compete Using
Marketing
 Identifying consumer wants and needs
 Pricing
 Advertising and promotion
OM’s Contribution to Strategy
Operations
Decisions
Specific
Strategy Used
Examples
Quality
Product
FLEXIBILITY
Sony’s constant innovation of new products
HP’s ability to follow the printer market
Process
Design
Volume
Southwest Airlines No-frills service
LOW COST
Location
DELIVERY
Pizza Hut’s five-minute guarantee at lunchtime
Federal Express’s “absolutely, positively on time”
Layout
Human Resource
Supply Chain
Speed
Dependability
Maintenance
Differentiation
(Better)
QUALITY
Motorola’s automotive products ignition systems
Motorola’s pagers
Conformance
Performance
Inventory
Scheduling
Competitive
Advantage
IBM’s after-sale service on mainframe computers
Fidelity Security’s broad line of mutual funds
Cost
leadership
(Cheaper)
Response
(Faster)
AFTER-SALE SERVICE
BROAD PRODUCT LINE
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Strategy（战略） and Tactics（策略）
 Distinctive Competencies
The special attributes or abilities that give an
organization a competitive edge.

Strategy Factors






Price
Quality
Time
Flexibility
Service
Location
Examples of Operations Strategies
Evaluating Operational Decision
Making Performance Measurement

Efficiency（效率） vs. Effectiveness（效力）



Efficiency: Doing something at the lowest possible cost
Effectiveness: Doing the right things to create the most
value for the company
Productivity (生产率)

A measurement of how well resources are used
Productivity
Units produced
= Input used
Example: if units produced = 1000 units and labor-hours
used is 250, then 1000/250 = 4 units per labor hour
 The key factor in Operational Decisions is
to improve productivity!!!
54
Problems for Measuring
Productivity
 Quality(质量): How to measure the improvement
of quality?

동일 입력 동일 출력, 그러나 다른 품질..
 External elements may influence on the
productivity（生产率）

외부적 요소에 쉽게 영향을 받는 경우
예) 석유값이 급등했을 경우...
 Precise units of measure may be lacking

100만원 짜리 자동차 한대, 10만원 짜리 자동차 1대
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Productivity
To Gain Competitive Advantage…
Productivity =
Output
Input
Partial Productivity:
1) Labor Productivity = Output/Labor
2) Capital Productivity = Output/Capital
3) Energy Productivity = Output/Energy
Multifactor productivity
=
Profits
Costs
How?
* Competitive Advantage (경쟁우위) :
56
경쟁자와 비교하여 우월한 성과를 갖도록 기업이 개발한 독특한 위치
Measures of Productivity
Partial
measures
Multifactor
measures
Total
measure
Output
Labor
Output
Output
Machine Capital
Output
Labor + Machine
Output
Energy
Output
Labor + Capital + Energy
Goods or Services Produced
All inputs used to produce them
Table 2.4
Quiz:

ABS Co. has 10 staffs, each working 8 hrs/day (Payroll
cost: $100) and overhead cost $50 per day. This company
makes 10 audio sets each day. This company trying to
buy new machine that allow the processing of 15 audio
sets per day. For using this machine, all things are same
except for overhead expenses ($ 100/day)

Analyze the ABS co. in terms of productivity!
58
Quiz:
Calculate Productivity



# of staffs 10, each working 8hrs (for a payroll cost of $100/day)
and overhead expenses of $50 per day.

Output 10 units per day

Overhead cost ->$100 per day

Labor productivity w/ old system = 10 units per day/80 labor-hour per
day = 0.125 units per labor-hour
Labor productivity w/ new system = 15/80 = 0.1875 units per laborhour
Multifactor productivity w/ old system = 10 units per day/($100+50) =
0.067 units per dollar
Multifactor productivity w/ new system = 15/($100 + 100) = 0.075
units per dollar
Improvement: (0.1875-0.125)/0.125 = 0.5=> 50 % increased in
labor-productivity
0.075/0.0667 = 1.119=> 11.9% increased in multifactor productivity
New system: 15 units per day
Analysis in terms of Productivity:





Caution: unit
59
Productivity Variables
 Three critical factors to improved
productivity
 Labor（劳动）, historically 10% improvement
 Capital（资金）, about 38% improvement
 Management(经营), about 52%
improvement
 Knowledge has value to improve productivity =>
Money
 Technology
Knowledge Management (지식경영)
60
Summary



Competition is the driving force in many organizations. It may involve price, quality,
special features or services, time, or other factors. To develop effective strategies for
business, it is essential for organizations to determine what combinations of factors
are important to customers, which factors are order qualifiers, and which are order
winners.
It is essential that goals and strategies be aligned with the organization’s mission.
Strategies are plans for achieving organizational goals. They provide focus for
decision making. Strategies must take into account present and future customer
wants, as well as the organization’s strengths and weaknesses, threats and
opportunities. These can run the gamut from what competitors are doing, or are
likely to do, to technology, supply chain management, and e-business. Organizations
generally have overall strategies that pertain to the entire organization and strategies
that pertain to each of the functional areas. Functional strategies are narrower in
scope and should be linked to overall strategies. Time-based strategies and qualitybased strategies are among the most widely used strategies business organizations
employ to serve their customers and to become more productive.
Productivity is a measure of the use of resources. There is considerable interest in
productivity both from an organizational standpoint and from a national standpoint.
Business organizations want higher productivity because it yields lower costs and
helps them to become more competitive. Nations want higher productivity because it
makes their goods and services more attractive, offsets inflationary pressures
associated with higher wages, and results in a higher standard of living for their
people.
To be OM Expert !!!
Developing
Proper Model
Understanding
Problem
Existing Models:
LP Model,
Queueing Model,
Simulation Model,
PERT/CPM Model
Communicable
with other OM People
Domain Expert
(Studying general
Problems and Working
Experience)
Develop New Models
OM EXPERT!!
Operations Research
(경영과학)
Mathematical Programming,
and Computational
Methodology
Finding Solution
Technique
62
What you should do by the next time!
 HW #1 (Due Date: 2008/3/18
 Try all examples and Solved Problem
 Solve the Problem on Chapter
 Review Ch. 1 and 2 again
 Important Concepts
 Important People
 Keywords
 Read Ch. 17
63
Good Bye!
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