opma chap 1

Operations

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

Goods

Physical items that include raw materials, parts, subassemblies such as motherboards that go into computers, and final products such as cell phones and automobiles.

Services

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

Finance, Operations, Marketing

Basic functions of the business organization

Finance

Responsible for securing financial resources at favorable prices and allocating those resources throughout the organization, as well as budgeting, analyzing investment proposals, and providing funds for operations.

Marketing

Responsible for assessing consumer wants and needs, and selling and promoting the organization’s goods or services.

Operations

Responsible for producing the goods or providing the services offered by the organization.

Operations management

The management of systems or processes that create goods and/or provide services.

Supply Chain

the sequence of organizations-their facilities, functions, and activities-that are involved in producing and delivering a product or service.

Supplier, Direct suppliers, Producer, Distributor, Final Customers

Sequence of supply chain

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

Input

•Land

•Labor

•Capital

•Information

Output

Goods, services

Transformation/ conversion process

Value added, operations function involves the conversion of inputs into outputs. make the difference between the cost of inputs and the value or price of outputs.

Product packages

are a combination of goods and services. can make a company more competitive.

The world you live in. The global dependencies of companies and nations. Reasons that companies succeed or fail. The importance of working with others

Through learning about operations and supply chains you will have a better understanding of

Marketing, Operations, Finance

Basic Functions of the Business Organization

•Budgeting

•Economic analysis of investment proposals

•Provision of funds

Function Overlap, Finance & operations

•Demand data

•Product and service design

•Competitor analysis

•Lead time data

Marketing & operations

Process

one or more actions that transform inputs into outputs

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.

Operations & Supply Chains Supply > Sales & Marketing Demand

Wasteful, Costly

Operations & Supply Chains Supply < Sales & Marketing Demand

Opportunity loss customer dissatisfaction

Operations & Supply Chains Supply = Sales & Marketing Demand

Ideal

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.

Variations

can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems.

Operations function

consists of all activities directlyrelated to producing goods or providing services.

decision making

A primary function of the operations manager is to guide the system by

System Design

Capacity

–Facility location

–Facility layout

–Product and service planning

–Acquisition and placement of equipment

•These are typically strategic decisions that

•usually require long-term commitment of resources

•determine parameters of system operation

System operation

•These are generally tactical and operational decisions

–Management of personnel

–Inventory management and control

–Scheduling

–Project management

–Quality assurance

•Operations managers spend more time on system operation decision than any other decision area

•They still have a vital stake in system design

 

Model

an abstraction of reality; a simplification of something. 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

look like their real-life counterparts. Examples include miniature cars, trucks, airplanes, toy animals and trains, and scale-model buildings. The advantage of these models is their visual correspondence with reality. 3-D printers

Schematic models

are more abstract than their physical counterparts. That is, they have less resemblance to the physical reality. Examples include graphs and charts, blueprints, pictures, and drawings. The advantage is that they are often relatively simple to construct and change. Moreover, they have some degree of visual correspondence.

Mathematical models

are the most abstract: They do not look at all like their real-life counterparts.

Examples include numbers, formulas, and symbols. These models are usually the easiest to manipulate, and they are important forms of inputs for computers and calculators.

Benefits of Models

1. 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

Model Limitations

Quantitative information may be emphasized at the expense of qualitative information

•Models may be incorrectly applied and the results misinterpreted

•This is a real risk with the widespread availability of sophisticated, computerized models placed in the hands of uninformed users

•The use of models does not guarantee good decisions

Quantitative Approaches

A decision-making approach that frequently seeks to obtain a mathematically optimal solution

•Supported by computer calculations

•Often work together with qualitative approaches

Performance metrics

All managers use it to manage and control operations

•Profits

•Costs

•Quality

•Productivity

•Flexibility

•Inventories

•Schedules

•Forecast accuracy

Analysis of trade-offs

giving up one thing in return for something else

•Carrying more inventory (an expense) in order to achieve a greater level of customer service

System

a set of interrelated parts that must work together

•The business organization is a system composed of subsystems

•Marketing subsystem

•Operations subsystem

•Finance subsystem

The systems approach

•Emphasizes interrelationships among subsystems

•Main theme is that the whole is greater than the sum of its parts

•The output and objectives of the organization take precedence over those of any one subsystem

Establishing Priorities

In nearly all cases, certain issues or items are more important than others

•Recognizing this allows managers to focus their attention to those efforts that will do the most good

Pareto Phenomenon

a few factors account for a high percentage of occurrence of some event(s)

•The critical few factors should receive the highest priority

•This is a concept that is appropriately applied to all areas and levels of management

Craft production

System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods.

Industrial Revolution

Management theory and practice did not advance appreciably during this period

Scientific Management

Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperation between management and workers, and separating management activities from work activities

•Emphasis was on maximizing output

Frederick Winslow Taylor

Scientific management Movement was led by efficiency engineer

Human relations movement

emphasized the importance of the human element in job design

•Lillian Gilbreth – applications of psychology

•Elton Mayo – Hawthorne studies on worker motivation, 1930

•Abraham Maslow – motivation theory, 1940s; hierarchy of needs, 1954

•Frederick Hertzberg – Two Factor Theory, 1959

•Douglas McGregor – Theory X and Theory Y, 1960s

•William Ouchi – Theory Z, 1981

Decision Models & Management Science

•F.W. Harris – mathematical model for inventory management, 1915

•Dodge, Romig, and Shewart – statistical procedures for sampling and quality control, 1930s

•Tippett – statistical sampling theory, 1935

•Operations Research (OR) Groups – OR applications in warfare

•George Dantzig – linear programming, 1947

 

Influence of Japanese Manufacturers

Refined and developed management practices that increased productivity

•Credited with fueling the “quality revolution”

•Just-in-Time production

Operations Today

•Technology Management

•Global competition

•Working with fewer resources

•Revenue management

•Agility

Key Issues for Operations Managers Today

•Economic conditions

•Innovating

•Quality problems

•Risk management

•Cyber-security

•Competing in a global economy

Sustainability

Using resources in ways that do not harm ecological systems that support human existence.

measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making

•All areas of business will be affected

•Product and service design

•Consumer education programs

•Disaster preparation and response

•Supply chain waste management

•Outsourcing decisions

Ethical issues that may arise in many aspects of operations management

•Financial statements

•Worker safety

•Product safety

•Quality

•The environment

•The community

•Hiring and firing workers

•Closing facilities

•Workers’ rights

The Need for Supply Chain Management

In the past, organizations did little to manage __________ beyond their own operations and immediate suppliers which led to numerous problems

•Oscillating inventory levels

•Inventory stockouts

•Late deliveries

•Quality problems

Supply Chain Issues

1.The need to improve operations

2.Increasing levels of outsourcing

3.Increasing transportation costs

4.Competitive pressures

5.Increasing globalization

6.Increasing importance of e-business

7.The complexity of supply chains

8.The need to manage inventories