Agora Vs/ Meena Bazaar Vs. PQS
Boeing missed production deadline …
Why some companies succeed
While others fail
Adeyl Khan, Faculty, BBA, NSU
Operations Management
 Managing that part of the organization responsible for
producing goods and services
 Management of systems or processes that create goods
and/or provide services
Operations
Examples
Goods Producing
Farming, mining, construction manufacturing, power
generation
Storage/Transport
ation
Warehousing, trucking, mail service, moving, taxis, buses,
hotels, airlines
Exchange
Retailing, wholesaling, banking, renting, leasing, library,
loans
Entertainment
Films, radio and television, concerts, recording
Communication
Newspapers, radio and television, newscasts, telephone,
satellites
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Adeyl Khan, Faculty, BBA, NSU
Organization’s Basic Functions
Secure Fin.
Resources
OM in the news
•
•
•
•
•
Productivity
Quality
E-business
Global Competition
Customer Service
Finance
Budgeting
Funding …
Organization
Operations
Competitiveness?
Adeyl Khan, Faculty, BBA, NSU
Marketing
Producing
Assess
Customer
needs
Selling &
Promoting …
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Value-Added Process
Value-added = Value or price of outputs – Cost of inputs
Adeyl Khan, Faculty, BBA, NSU
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Value-Added Process
The operations function involves the conversion
of inputs into outputs
Value added
Inputs
* Land
* Labor
* Capital
Transformation/
Conversion
process
Outputs
Goods
Services
Feedback
Control
(Measurement)
Feedback
Adeyl Khan, Faculty, BBA, NSU
Feedback
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Food Processor
Inputs
Processing
Outputs
Raw Vegetables
Metal Sheets
Water
Energy
Labor
Building
Equipment
Cleaning
Making cans
Cutting
Cooking
Packing
Labeling
Canned vegetables
Scraps!
Hospital Process
Inputs
Processing
Outputs
Doctors, nurses
Hospital
Medical Supplies
Equipment
Laboratories
Examination
Surgery
Monitoring
Medication
Therapy
Healthy patients
Adeyl Khan, Faculty, BBA, NSU
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Products/Goods-service Continuum
Tangible
Act
Goods
Service
Surgery, teaching
Song writing, software development
Computer repair, restaurant meal
Automobile Repair, fast food
Home remodeling, retail sales
Automobile assembly, steel making
Grameen Cell phone
Product/Service?
Product packages = Good(s) + service(s)
Make
company more competitive- more value to customers
Adeyl Khan, Faculty,
BBA,aNSU
1-7
Goods Production & Service Delivery
 Production of goods
 Tangible output
 Production oriented
 Delivery of services
 An act
Yet operations are similar!
Adeyl Khan, Faculty, BBA, NSU
Service job categories
•
•
•
•
•
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•
Government
Wholesale/retail
Financial services
Healthcare
Personal services
Business services
Education
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Example!
Goods vs Service- Key differences
Characteristic
Goods
Service
Customer contact
Low
High
Uniformity of input
High
Low
Labor content
Low
High
Uniformity of output
High
Low
Output
Tangible
Intangible
Measurement of productivity
Easy
Difficult
Opportunity to correct problems
High
Low
Inventory
Much
Little
Evaluation
Easier
Difficult
Patentable
Usually
Not usual
Adeyl Khan, Faculty, BBA, NSU
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Scope of Operations Management
 Forecasting
 Capacity planning
 Scheduling
 Managing inventories
 Assuring quality
 Motivating & Training employees
 Deciding where to locate facilities
 Supply chain management

And more . . .
Example!
Adeyl Khan, Faculty, BBA, NSU
1-10
Decline in Manufacturing Jobs in US!
Increase of Service 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
Bangladesh!
Adeyl Khan, Faculty, BBA, NSU
1-11
Manufacturing Matters
 More than half of the total R&D performed is in the
manufacturing industries
 When a California manufacturing job is lost, an
average of 2.5 service jobs are lost
 Accounts for most exports
What about
Outsourcing
Adeyl Khan, Faculty, BBA, NSU
1-12
Managing Services is Challenging
 Service jobs are often less structured than
manufacturing jobs
 Customer contact is higher
 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
Adeyl Khan, Faculty, BBA, NSU
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Business Operations Overlap
The operations function involves the
conversion of inputs into outputs
Operations
Marketing
Adeyl Khan, Faculty, BBA, NSU
Finance
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Operations interfaces with supporting
Production
functions
Marketing
Distribution
Lead time
Purchasing
Operations
Public
Relations
Legal
Personnel
Accounting
Adeyl Khan, Faculty, BBA, NSU
MIS
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OM- Planning and Decision Making
Key Decisions of Op. Managers
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What resources/amounts
When needed/scheduled/ordered
Where work-location
How Designed/Done
Who worker
Alternatives & Impact on
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Cost
Profit
Goal
Mission, Vision ….
Adeyl Khan, Faculty, BBA, NSU
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Decision Making … (Level)
System Design
• Capacity
• Location
• Arrangement of
departments
• Product and service
planning
• Acquisition and
placement of
equipment
Adeyl Khan, Faculty, BBA, NSU
System operation
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•
•
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•
Personnel
Inventory
Scheduling
Project Management
Quality Assurance
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How to make decisions
Models
Quantitative
approaches
Analysis of trade-offs
Establishing
priorities
Adeyl Khan, Faculty, BBA, NSU
Ethics
Systems
approach
Different approaches to make informed decision. 18
Models
 An abstraction of reality.
 A simplified version (typically)
 Physical ~ Crash test
 Schematic ~ Blueprints
 Mathematical ~ Statistical
Tradeoffs
Models are not perfect
Pros and cons of models
Adeyl Khan, Faculty, BBA, NSU
1-19
Advantages
• Easy to use, less
expensive
• Require users to
organize
• Increase understanding
of the problem
• Enable “what if”
questions
• Consistent tool for
evaluation and
standardized format
• Power of mathematics
Adeyl Khan, Faculty, BBA, NSU
Limitations
• Quantitative
information may be
emphasized over
qualitative
• Models may be
incorrectly applied and
results misinterpreted
• Nonqualified users may
not comprehend the
rules on how to use the
model
• Use of models does not
guarantee good
decisions
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Quantitative Approaches
 Linear programming
 Queuing Techniques
 Inventory models
 Project models
 Statistical models
Vs.
Qualitative
Approaches
Adeyl Khan, Faculty, BBA, NSU
1-21
Analysis of Trade-Offs
 Decision on the amount of inventory to stock
Customer
Adeyl Khan, Faculty, BBA, NSU
Cost
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Establishing priorities
Pareto Phenomenon
 A few factors account for a high percentage of the
occurrence of some event(s).
 The 80/20 Rule
 80% of problems are caused by 20% of the activities.
How do we identify the vital few?
Adeyl Khan, Faculty, BBA, NSU
1-23
Systems Approach- “The whole is
greater than the sum of the parts.”
Suboptimization
Adeyl Khan, Faculty, BBA, NSU
1-24
Ethical Issues
 Consider how a decision will affect
 Shareholders ~ Financial statements
 Management
 Employees ~ Worker safety, Hiring/firing workers,
Worker’s rights
 Customer ~ Quality, Product safety
 Community ~ Closing facilities
 Environment ~ Product safety
Adeyl Khan, Faculty, BBA, NSU
1-25
Historical Evolution of Operations
Management
 Industrial revolution (1770’s)
 End of craft production
 Introduction of Machine Power
 Scientific management (1911) & Ford Model T
 Mass production
 Interchangeable parts
 Division of labor
 Human relations movement (1920-60)~ Hawthorne
 Decision models (1915, 1960-70’s)~ IM Models, SPC
 Influence of Japanese manufacturers (After WWII)
 Quality revolution
Adeyl Khan, Faculty, BBA, NSU
1-26
Current trends in Business
Major Trends
Other Trends
• The Internet, ecommerce, ebusiness
• Management
technology
• Globalization
• Management of
supply chains
• Outsourcing
• Ethical behavior
• Operations strategy
• Working with fewer
resources
• Revenue management
• Process analysis and
improvement
• Increased regulation
and product liability
• Lean production
• Agility
Adeyl Khan, Faculty, BBA, NSU
1-27
Management Technology
 Technology: The application of scientific
discoveries to the development and improvement of
goods and services
 Product and service technology
 Process technology
 Information technology
Adeyl Khan, Faculty, BBA, NSU
1-28
Supply Chain
Suppliers’
Suppliers
Direct
Suppliers
Producer
Distributor
Final
Consumer
Supply Chain: A sequence of activities
And organizations involved in producing
And delivering a good or service
Adeyl Khan, Faculty, BBA, NSU
1-29
A Supply Chain for Bread
Adeyl Khan, Faculty, BBA, NSU
30
A Supply Chain for Bread
Value Added
Value of Product
Farmer produces and harvests wheat
$0.15
$0.15
Wheat transported to mill
$0.08
$0.23
Mill produces flour
$0.15
$0.38
Flour transported to baker
$0.08
$0.46
Baker produces bread
$0.54
$1.00
Bread transported to grocery store
$0.08
$1.08
Grocery store displays and sells bread
$0.21
$1.29
Total Value-Added
$1.29
Stage of Production
Adeyl Khan, Faculty, BBA, NSU
1-31
Adeyl Khan, Faculty, BBA, NSU
32
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
Adeyl Khan, Faculty, BBA, NSU
1-33
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
Adeyl Khan, Faculty, BBA, NSU
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