OMIS 430 Chapter 1

Operations

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

Operations Management

Management of systems or processes that create goods or provide services

Goods

are physical items that include raw materials, parts, subassemblies, and final products

Service

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

Value Added

is the difference between the cost of inputs and the value or price of outputs

Supply Chain

A sequence of activities and organizations involved in producing and delivering a good or service
(each entity has to show their value, or they will be dropped)

Marketin

Controls Demand

Operations

Controls supply and is the heart of the organization

Financing

Enough capital and profitable

Process

one or more actions that transform inputs into outputs

Supply

Losing Money

Supply>Demand

Wasteful

Supply=Demand

Ideal

Upper-management processes

These govern the operation of the entire organization.

Operational processes

These are core processes that make up the value stream.

Supporting processes

These support the core processes.

Variety of goods or services being offered

The greater the variety of goods and services offered, the greater the variation in production or service requirements.

Structural variation in demand

These are generally predictable. They are important for capacity planning.

Random variation

Natural variation that is present in all processes. Generally, it cannot be influenced by managers.

Assignable variation

Variation that has identifiable sources. This type of variation can be reduced, or eliminated, by analysis and corrective action.

Role of Operations Manager

A primary function of the operations manager is to guide the system by decision making.
System Design Decisions
System Operation Decisions

Model

an abstraction of reality; a simplification of something.

Common features of models:

They are simplifications of real-life phenomena
They omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real-life system

Physical Models

Looks like their real-life counterparts

Schematic Models

Look less like their real-life counterparts than physical models

Mathematical Models

Do not look at all like their real-life counterparts

Benefits of Models

1.Models are generally easier to use and less expensive than dealing with the real system
2.Require users to organize and sometimes quantify information
3.Increase understanding of the problem
4.Enable managers to analyze “What if?” questions
5.Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem
6. Enable users to bring the power of mathematics to bear on a problem

Pareto Principle

For many events, roughly 80% of the effects come from 20% of the causes.

Goldratt’s Theory of Constraints

In every process, there is a bottleneck that serves as a constraint on the process, which then sets the speed at which you achieve any particular goal.
What Goldratt found is that if you concentrate all of your creative energies and attention on alleviating the constraint, you can speed up the process faster than by doing any other single thing.