Introduction

What is Productions and Operations Management?

  • A field of study involving the planning, coordinating, and executing of all activities that create goods or provide services
  • Focus: To explore a variety of decision making tools that operations managers can use in the decision making process. These tools are classified as
  • Quantitative
  • Queuing techniques
  • Inventory Models
  • Project models (PERT/CPM)
  • Forecasting techniques
  • Statistical models
  • Breakeven analysis
  • Analysis of trade-offs
  • In inventory management we balance tradeoff between two objectives – minimize cost of carrying inventory and maximize customer service level
  • The models in discussed will reflect tradeoffs between cost and benefit
  • System approach
  • Emphasizes interrelationships among subsystems
  • Main theme: the whole is greater than the sum of its individual parts
  • From a systems viewpoint, the output and objectives of the organization as a whole takes precedence over those of any on subsystem
  • Establishing priorities
  • Recognition of priorities means devoting more attention to what is most important
  • Uses the Pareto phenomenon – a relatively few factors are most important – dealing with those will have a disproportionately large impact on the results achieved
  • 80/20 rule
  • Ethics
  • Operations managers, like all managers have the responsibility to make ethical decisions on:
  • Worker safety, product safety, quality, the environment, the community, hiring and firing workers, worker’s rights

Why study Operations Management (OM)?

  • Operations management activities at the core of all business organizations
  • 35% or more of all jobs are in OM related areas (customer service, quality assurance, production planning and control, scheduling, job design, inventory management, etc.
  • Activities in all other areas of business organizations (finance, accounting, marketing, human resource, etc.) are interrelated with OM
  • POM is all about management – all managers need to possess the knowledge and skill in the content areas in OM – learn and understand the variety of decision making tools in the decision making process
  • A course that will prepare students in developing business plans (BA 499 –Business Planning is the capstone course for ALL business majors)
Three Basic Functions of Business Organizations
  • Finance, Production/operations, Marketing

The operations function involves the creation of inputs into outputs

Examples of Types of Operations

Type of Operation / Examples
Goods producing / Farming, mining, construction, manufacturing, power generation
Storage/transportation / Warehousing, trucking, mail service, moving, taxis, buses, hotel, airlines
Exchange / Retailing, wholesaling, banking, renting or leasing, library loans
Entertainment / Films, radio and TV, plays, concerts, recording
Communication / Newspapers, radio and TV newscast, telephone, satellite

Illustrations of the Transformation Process

Food Processing / Inputs / Processing / Output
Raw vegetables
Metal sheets
Water
Energy
Labor
Building
Equipment / Cleaning
Making cans
Cutting
Cooking
Packing
Labeling / Canned vegetables
Hospital / Inputs / Processing / Output
Doctors, nurses
Hospitals
Medical supplies
Equipment
Laboratories / Examination
Surgery
Monitoring
Medication
Therapy / Healthy patients

Examples of inputs, transformation, and outputs

Inputs / Transformation / Output
Land
Human
Physical
Intellectual
Raw materials
Energy
Water
Chemical
Metals
Wood
Equipment
Machines
Computers
Trucks
Tools
Facilities
Hospitals
Factories
Offices
Retail stores
Other
Information
Time / Processes
Cutting, drilling
Transporting
Teaching
Farming
Mixing
Packing
Canning
Consulting
Copying, faxing / Goods
Houses
Autos
Clothing
Computers
Machines
TVs
Food products
Textbooks
Magazines
Shoes
Electronic items
Services
Health care
Entertainment
Car repair
Delivery
Gift wrapping
Legal
Banking
Communication

Production Good versus Service Operations

Characteristics / Goods / Services
Output
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct quality problems before delivery to customer / Tangible
Low
High
Low
High
Easy
High / Intangible
High
Low
High
Low
Difficult
Low

Productivity, Competitiveness and Strategy

Productivity – an index that measures outputs (goods or services) relative to the input

Some Examples of Different

Types of Productivity Measures

Partial measures

Multifactor measures

Total Measures

Factors that Affect Productivity

  • Methods
  • Capital
  • Quality
  • Technology
  • Management

Strategy

  • Has a long term impact on the nature and characteristics of the organization
  • Affects the ability of an organization to compete, or in the case of a nonprofit organization, the ability to serve its intended purpose
  • The nature of an organization’s strategy depends on its mission
Mission
  • The basis of the organization – the reason for its existence
Mission statement
  • Answers the question, “What business are we in?”
  • Serves to guide formulation of strategies for the organization as well as the decision making at all levels
  • Without it an organization is likely to achieve its true potential because there is little direction for formulating strategies
Strategies and Tactics
  • Strategies are plans for achieving goals
  • Strategies provide focus
  • Tactics are the methods and actions to accomplish strategies
  • The “how to” part of the process

Strategy Formulation – the formulation of an effective strategy must take into account:

1)distinctive competencies of the organization – this can be accomplished by doing a SWOT (strengths, weaknesses, opportunities, and threats) analysis

price, quality, time, flexibility, service, location

2)scan the environment – the considering of events and trends that present either threat or opportunities

External factors:

economic condition, political condition, legal environment, technology, competition, markets

Internal factors:

Human resources, facilities and equipment, financial resources, customers, products and services, technology, suppliers