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INTRODUCTIONINTRODUCTIONtoto
Operation ManagementOperation Management
Chapter 1Chapter 1
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Chapter OutlineChapter Outline
Definition of Operations ManagementDefinition of Operations Management
Decisions at Pizza U.S.A.Decisions at Pizza U.S.A.
Operations Decisions - A FrameworkOperations Decisions - A Framework
Cross-Functional Decision MakingCross-Functional Decision Making
Operations as a SystemOperations as a System
Contemporary Operations ThemesContemporary Operations Themes
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Definition ofDefinition ofOperations ManagementOperations Management
Operations is responsible for supplying the product orservice of the organization. Operations managers make
decisions regarding the operations function and itsconnection with other functions. The operations managersplan and control the production system and its interfaces
within the organization and with the external environment.
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The Operations DefinitionThe Operations Definition
Operations as a basic functionOperations as a basic functionOperations as a transformation processOperations as a transformation processOperations as the technical coreOperations as the technical core
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The Operation As A BasicThe Operation As A Basic
FunctionFunction
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Basic FunctionBasic Function
The best way to start understanding the nature The best way to start understanding the nature of P/OM is to look around you.of P/OM is to look around you.
Everything you can see around you (except the Everything you can see around you (except the flesh and the blood) has been done by P/OM.flesh and the blood) has been done by P/OM.
Every service you consumed today (radio Every service you consumed today (radio station, bus service, lecture, etc.) has also been station, bus service, lecture, etc.) has also been basically P/OM.basically P/OM.
P/O managers create everything you buy, sit on, P/O managers create everything you buy, sit on, wear, eat, throw at people and throw away.wear, eat, throw at people and throw away.
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Operations As A TransformationOperations As A Transformation
ProcessProcess
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Operations as a SystemOperations as a System(Figure 1.1)(Figure 1.1)
Transformation(Conversion)
Process
EnergyMaterials
LaborCapital
Information
Goods orServices
Feedback information forcontrol of process inputsand process technology
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INPUT OUTPUTINPUT OUTPUT Material GoodsMaterial Goods Machines TRANSFORMATION ServicesMachines TRANSFORMATION Services Manpower PROCESSManpower PROCESS Methods &Methods & ManagementManagement MoneyMoney FEEDBACKFEEDBACK
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THE 5 Ps or THE 5 Ms POMTHE 5 Ps or THE 5 Ms POM 5Ps 5Ms 5Ps 5Ms People Manpower People Manpower Plants Machines Plants Machines Parts Money Parts Money Processes Materials Processes Materials Planning and Methods Planning and Methods Control and Control and Management Management
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Transformation ProcessesTransformation Processes Physical Manufacturing Physical Manufacturing Location TransportationLocation Transportation Warehouse WarehouseExchange RetailExchange RetailPhysiological Health carePhysiological Health carePsychological EntertainmentPsychological EntertainmentInformational Communications Informational Communications
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Characteristics of GoodsCharacteristics of Goods
Tangible productTangible productConsistent product definitionConsistent product definitionProduction usually separate from Production usually separate from consumptionconsumptionCan be inventoriedCan be inventoriedLow customer interactionLow customer interaction
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Characteristics of ServicesCharacteristics of Services Intangible productIntangible productInconsistent product definitionInconsistent product definitionProduced and consumed at same timeProduced and consumed at same timeCannot be inventoriedCannot be inventoriedHigh customer interaction. High customer interaction.
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Operations as the Technical CoreOperations as the Technical Core
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Finance and AccountingFinance and Accounting Production and inventory data Technology plansProduction and inventory data Technology plans Capital budgeting and investments Costs analysis Capital budgeting and investments Costs analysis MarketingMarketing Product/service availability Status of ordersProduct/service availability Status of orders Lead time estimates PromotionsLead time estimates Promotions Delivery schedules Customer feedbacksDelivery schedules Customer feedbacks Sales forecastsSales forecasts Human ResourcesHuman Resources Personnel needs Skill setsPersonnel needs Skill sets Hiring/firing/training Job design/work measurementHiring/firing/training Job design/work measurement SuppliersSuppliers Orders for materials Quality dataOrders for materials Quality data Production/delivery Performance specsProduction/delivery Performance specs
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Relation of Operations to its Relation of Operations to its EnvironmentEnvironment
Figure 1.2Figure 1.2
Operations transformation systemSuppliers
HumanResources
Marketing
Accounting Finance MIS
Engineering
SOCIETY
GOVERNMENT
ExternalEnvironment
CUSTOMERS
COMPETITORS
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Key Points in OM DefinitionKey Points in OM Definition
DecisionsDecisionsFunctionsFunctionsSystemSystem
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Cross-FunctionalCross-FunctionalDecision MakingDecision Making
Operations as the primary functionOperations as the primary function
Other primary functions:Other primary functions:– MarketingMarketing– FinanceFinance
Supporting functionsSupporting functions
Major cross-functional decisions Major cross-functional decisions
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Definition ofDefinition ofOperations ManagementOperations Management
The design, operation, and improvement of The design, operation, and improvement of production systems that create the firm’s primary production systems that create the firm’s primary products or services.products or services.
The design and control of the systems responsible The design and control of the systems responsible for the productive use of raw materials, human for the productive use of raw materials, human resources, equipment, and facilities in the resources, equipment, and facilities in the development of a product or services.development of a product or services.
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Operations ManagementOperations Management
Planning Planning Organizing Organizing Staffing Staffing Directing and Directing and Controlling Controlling
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Desirable FeaturesDesirable Featuresof the Processof the Process
Low CostLow CostHigh QualityHigh QualityFlexibilityFlexibilitySpeed of DeliverySpeed of DeliveryInnovationInnovationEnvironmentally AcceptableEnvironmentally Acceptable
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Major Decisions at Pizza USAMajor Decisions at Pizza USAA Framework for OMA Framework for OM
ProcessProcess
QualityQuality
CapacityCapacity
InventoryInventory
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Contemporary Operations ThemesContemporary Operations Themes
Service and Manufacturing (differences and Service and Manufacturing (differences and implications)implications)
Customer-Directed OperationsCustomer-Directed Operations
Time Reduction (Lean Operations)Time Reduction (Lean Operations)
Integration of Operations and Other FunctionsIntegration of Operations and Other Functions
Environmental ConcernsEnvironmental Concerns
Globalization of OperationsGlobalization of Operations
Supply Chain ManagementSupply Chain Management
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