What Is Productions and Operations Management?

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

Illustrations of the Transformation Process

Examples of inputs, transformation, and outputs

Production Good versus Service Operations

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