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Operations

The part of a business organization that is responsible for producing goods or services

Operations Management

The management of systems or processes that create goods and/or provide services / The science and the art of ensuring that goods and services are created and delivered successfully to customers

Goods

Physical items that include raw materials, parts, subassemblies, and final products

Services

Activities that provide some combination of time, location, form or psychological value

Characteristics of Goods

Tangible products that can be inventoried, usually produced separately from consumption, with low customer interaction

Characteristics of Services

Intangible products produced and consumed at the same time, often unique, knowledge-based, with high customer interaction

Marketing

Business function that manages customer demands and generates sales for operations

Operations Function

Consists of all activities directly related to producing goods or providing services, managing people, equipment, technology, materials, and information

Finance

Business function that manages cash flow, current assets, and capital investments

Inputs

Resources such as land, labor, capital, and information used in the transformation process

Value-Added Transformation Process

The conversion process that transforms inputs into outputs

Outputs

The final result of the transformation process, consisting of goods and services

Feedback

Measurements taken at various points in the transformation process

Control

The comparison of feedback against previously established standards to determine if corrective action is needed

Scope of Operations Management

The breadth of activities across the organization including forecasting, capacity planning, facility layout, scheduling, inventory management, quality assurance, and facility location

Role of the Operations Manager

Guiding the system through decision making in system design and system operation

System Design Decisions

Strategic decisions that usually require long-term commitment of resources and determine system parameters (e.g., capacity, facility location/layout, product planning, equipment acquisition)

System Operation Decisions

Tactical and operational decisions involved in managing personnel, inventory, scheduling, project management, and quality assurance

Key Issues for Operations Managers Today

Major operational challenges including economic conditions, innovating, quality problems, risk management, and competing in a global economy

Division of Labor

Concept introduced by Adam Smith in 1776 focusing on breaking down work into specialized tasks

Interchangeable Parts

Concept introduced by Eli Whitney in 1790 allowing standardized parts for manufacturing

Principles of Scientific Management

Management methodology introduced by Frederick W. Taylor in 1911

Motion Study

Use of industrial psychology and movement analysis pioneered by Frank and Lillian Gilbreth in 1911

Gantt Chart

A scheduling chart developed by Henry Gantt in 1912

Moving Assembly Line

Production innovation introduced by Henry Ford in 1913

Mathematical Model for Inventory Management

Mathematical framework for managing inventory developed by F. W. Harris in 1915

Hawthorne Studies

Research on worker motivation conducted by Elton Mayo in 1930

Statistical Quality Control

Statistical procedures for sampling and quality control developed by H. F. Dodge, H. G. Romig, W. Shewhart, and L. H. C. Tippett in 1935

Operations Research

Quantitative applications in warfare developed by operations research groups in 1940

Linear Programming

Mathematical optimization method introduced by George Dantzig in 1947

Commercial Digital Computers

Early business computing technology introduced by Sperry Univac and IBM in 1951

Industrial Dynamics

Field developed by Jay Forrester in the 1960s

Manufacturing Strategy Emphasis

Focus on quality, flexibility, time-based competition, and lean production pioneered by W. Skinner, Japanese manufacturers, and Taiichi Ohno in 1975