Topic 1- Introduction to OM

8/10/2019 Topic 1- Introduction to OM

1/31

10/15/2014 1

INDUSTRIALMANAGEMENT

To p ic 1: B asic Con cepts InProd uc t ion Managem ent


2/31

10/15/2014 2

OutlineNature of Production and OperationsManagementFunctions of a Operation managerProduction/Operations as atransformation process


3/31

Nature of Production andOperations Management

10/15/2014 NY_KJP 585 3


4/31

10/15/2014 4

What Is Industrial/OperationsManagement?

Production is the creation of goods and services

ManagementIn simple terms means the act of getting people together

to accomplish desired goals.

Management comprises planning, organizing,resourcing, leading or directing, and controlling anorganization (a group of one or more people or entities) oreffort for the purpose of accomplishing a goal.


5/31

10/15/2014 5

What Is Industrial/Operations

Management?Industrial/Operations management is the setof activities that creates value in the form of

goods and services by transforming inputsinto outputs

Or

Management of the conversion process, whichconverts land, labour, capital, and management

inputs into desired outputs of goods and services(POM, Everett&Ebert, p.11).


6/31

10/15/2014 6

Organizing to Produce Goods

and ServicesEssential functions:

Marketing generates demand

Production/operations

creates theproductFinance/accounting tracks how well theorganization is doing, pays bills, collectsthe money


7/31

10/15/2014 7

Organizational Charts

Operat ionsTellerSchedul ingCheck Clear ingCol lect ionTransact ionprocess ing

Facil i t iesdesign/ layoutVaul t o perat ionsMaintenanceSecur i ty

FinanceInvestmentsSecur i tyReal est ate

Accoun t ing

Aud i t i ng

Market ingLoans

Commerc ia lIndust r ia lFinancialPersonalMortgage

Trus t Depar tm ent

Com m erc ia l Bank

Figure 1.1(A)


8/31

10/15/2014 8


Operat ionsGround suppor t

equ ipmentMaintenanceGround Operat ions

Facil i tymaintenance

Catering

Fl igh t Operat ionsCrew schedul ingFlyingCommunica t i onsDispa tch ing

Management s c ience

Finance/accoun t ingAccoun t ing

PayablesReceivablesGeneral Ledg er

FinanceCash c on t ro l

Internationalexchange

Airl ine

Figure 1.1(B)

Market ingTrafficadmin is t ra t ion

Reservat ionsSchedulesTariffs (pric ing )

SalesAdver t i s ing


9/31

10/15/2014 9

Market ingSales

p r o m o t i o nAdver t i s ing

SalesMarketresearch


Operat ionsFacil i t ies

Cons t ruc t ion ; m ain tenance

Produc t ion and inven to ry con t ro l

Schedul ing ; m ater ial s c on t ro lQuali ty assurance and con t ro lSupply ch a in m anagementManufac tu r ing

Tool ing ; fabr icat ion ; assemb ly

Des ignProduc t deve lopment and des ignDeta il ed p rod uc t spec i f i ca tions

Ind us t r ia l engineer ingEffic ient use of m achines , space,

and personne l

Process analys isDevelopm ent and ins ta l lat ion of

produc t ion too l s and equ ipment

Finance/accoun t ingDisbursements /

credi ts

ReceivablesPayablesGeneral ledg er

Funds ManagementMoney m arketInternational

exchangeCapi tal requirements

S tock i s sueB o n d i s s u e

and recall

Manufac tur ing

Figure 1.1(C)


10/31

10/15/2014 10

Why Study OM?One of the major functions of anyorganizations (Production/Operation,Marketing, Finance/Accounting). Study howpeople organize themselves for productiveenterprise.Knowing how goods and services areproduced

Understand what operations manager do todevelop the necessary skills to become one. A costly part of an organization. Thereforeprovides major opportunity for organization toimprove profitability and enhance services.


11/31

Functions of a OperationManager

10/15/2014 NY_KJP 585 11


12/31

10/15/2014 12

What Operations

Managers DoPlanning

OrganizingStaffingLeading

Controlling

B asic Managem ent Proc ess

All good managers perform the basic functions of themanagement process to the decisions they make in theOperations Management function.


13/31

Some critical decisions of Operations Management: Service and product design Quality management Process and capacity design Location Layout design Human resources and job design Supply chain management Inventory, materials requirement planning, and

Just-in-time (JIT) Intermediate and short-term scheduling Maintenance

10/15/2014 NY_KJP 585 13

The Critical Decisions


14/31

10/15/2014 14

The Critical DecisionsDesign of goods and services

What good or service should we offer?How should we design these products

and services?Managing quality How do we define quality?Who is responsible for quality?

Table 1.2 (cont.)


15/31


16/31

10/15/2014 16

The Critical DecisionsLayout strategy

How should we arrange the facility?How large must the facility be to meet

our plan?Human resources and job design

How do we provide a reasonable work

environment?How much can we expect our employeesto produce?

Table 1.2 (cont.)


17/31

10/15/2014 17

The Critical Decisions

Supply chain management Should we make or buy this component?Who are our suppliers and who canintegrate into our e-commerce program?

Inventory, material requirements planning,and JIT

How much inventory of each item should wehave?When do we re-order?

Table 1.2 (cont.)


18/31


19/31

Production/Operations asa Transformation

process

10/15/2014 NY_KJP 585 19


20/31

10/15/2014 20

Operations management considers how the input are

transformed into goods or services.

Overview of Operations ManagementModel


21/31

10/15/2014 21

Measure of process improvementRepresents output relative to inputOnly through productivity increasescan our standard of living improve

Productivity

Prod uc t iv i ty =Unit s p rodu ced

Inp ut u sed


22/31

10/15/2014 22

Productivity Calculations

Produ ct iv i ty =Uni ts p rodu ced

Labor-ho urs us ed

= = 4 un i t s /labo r-ho ur1,000250

Labor Prod uc t iv i ty

One resourc e inp ut s ing le-fac tor pro du ct iv i ty


23/31

10/15/2014 23

Multi-Factor Productivity

Outpu t

L ab or + Mater ial + Energy+ Capi ta l + Misc el lan eo us

Prod uc t iv i ty =

Also k no wn as to tal fac to r p ro duc t iv i ty

Outpu t and inp uts a re of ten exp ressedin do l lars

Mult ip le resou rce inpu ts m ul t i -fac tor prod uc t iv i ty


24/31

10/15/2014 24

Example: Collins Title Company

Old System (8 titles per/day) 4 Staff working 8 hrs per day (Labour Hrs = 4 X 8 = 32) Payroll cost = $640 per day Overhead Cost = $ 400

New System (Purchased Computerized Title Search 14 titlesper/day ) 4 Staff working 8 hrs per day (Labour Hrs = 4 X 8 = 32) Payroll cost = $640 per day Overhead Cost = $ 800


25/31

10/15/2014 25

Example: Single-Factor ProductivityOld Sys tem

8 t i t les/day32 labour-hr

=produc t iv i ty

= .25 titles per labour-hr

New Sys tem

14 t i t les/day

32 labour-hr

=produc t iv i ty

= .43 titles per labour-hr

Labou r pro du ct ic i ty in crease f rom .25 to .43 % increased = .43 - .25

.25X 100% = 72 %


26/31

10/15/2014 26

Example: Multi-Factor Productivity


27/31

10/15/2014 27

Measurement Problems

Quali ty m ay ch ang e wh i le thequan t ity o f inpu t s and o u tpu t s

rem ains c on s tan tExternal e lem en ts m ay c aus e aninc rease or d ecrease in p rod uc t iv i ty

Precis e u n i ts o f m easu re m ay b elack ing


28/31

10/15/2014 28

Productivity Variables

Labor - co nt r ib utesabout 10% o f th eann ual incr ease

Capital - co nt r ib utesabout 38% o f th eann ual incr ease

Management -co n t r ibu tes abo ut 52% of th e an nu al inc rease


29/31

10/15/2014 29

Key Variables for Improved

Labor ProductivityBasic educ at ion app rop r iate for thelabo r forc e

Diet of th e labor for ce

Social ov erhead tha t m akes laboravailable

Mainta in in g and enh ancing sk i l ls in them ids t o f r ap id ly chang ing t echno logyand k no wledge


30/31

Inv es tm ent in to ols u sed.

Explo re adv anc e m ach ines /too ls /sy s tem s tha t can inc reasedprod uc t iv ity in long ru n

10/15/2014 30

Key Variables for ImprovedCapital


31/31

Develop K no w ledg e soc iety inManagement

Deplo y m ore effec t ive m etho ds andsy s tem .

Wi ll ing to inves t to l earn n ew th ings &sk i l ls req uired.

10/15/2014 31

Key Variables for Management

Documents

Topic 1- Introduction to OM