Post on 21-Dec-2015
description
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Operations Management
Course Content• Introduction – 1hr• Forecasting – 3 hrs• Decision Tables & Decision Trees – 5 hrs• Linear Programming – 2 hrs• Simulation – 1 hr• Project Management - 2 hrs• Transportation Models – 3 hrs• Location Strategy – 3 hrs• Process Strategy – 3 hrs• Capacity Planning - 2 hrs• Maintenance& Reliability – 4 hrs• Linear Programming Applications – 3 hrs• Simulation Applications – 3 hrs• Quality – 2 hrs
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Operations Management
References:
1. Heizer, J, Render B, Operations Management, 7th Edition, Pearson Prentice Hall, NJ, 2004
2. Chase R B, Aquilano N J,, Jacobs F R, Operations Management forCompetitive Advantage, McGraw Hill, 2001.
3. Hillier F S, Hillier M S, Lieberman G J, Introduction to ManagementScience, A Modelling and Case Studies Approach with Spreadsheets, Irwin McGraw Hill, Singapore, 2000.
4. Riggs J L, Bedworth D D, Randhawa S U, Engineering Economics,4th Edition, mcGraw Hill, Singapore, 1998.
5. Winston W L, Introduction to Mathematical Programming, Applicationsand Algorithms, Duxberg Press, 1991.
6. Newendorp P D, Decision Analysis for Petroleum Exploration, PennWellBooks, PennWell Publishing Co., Tulsa, Oklohama, 1975.
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Operations Management
INTRODUCTION
Operations and ProductivityOperations and Productivity• Why Study OM?
• What Operations Managers Do?
• Organizing to Produce Goods and Services
• Where are the OM Jobs?
• Exciting New Trends in OM
• Operations in the Service Sector
• The Productivity Challenge
• The Challenge of Social Responsibility
ProductionProduction is the creation of goods and services is the creation of goods and services Operations managementOperations management is the set of activities that creates goods and is the set of activities that creates goods and
services through the transformation of inputs into outputsservices through the transformation of inputs into outputs
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Operations Management
Why Study OM?• OM is one of three major functions (marketing, finance, and
operations) of any organization
• We want (and need) to know how goods and services are produced
• We want to know what operations managers do
• OM is such a costly part of an organization
What Operations Managers Do?What Operations Managers Do? PlanPlan OrganizeOrganize StaffStaff LeadLead ControlControl
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Operations Management
Ten Critical Decisions
• Managing quality
• Design of goods and services
• Location strategies
• Layout strategies
• Human resources
• Supply-chain management
• Inventory management
• Scheduling
• Maintenance
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Operations Management
The Critical Decisions• Quality management
– Who is responsible for quality?– How do we define quality?
• Goods and services design– What product or service should we offer?– How should we design these products and services?
Process and Capacity designProcess and Capacity design• What processes will these products require and in what What processes will these products require and in what
order?order?• What equipment and technology is necessary for these What equipment and technology is necessary for these
processes?processes? LocationLocation
• Where should we put the facilityWhere should we put the facility• On what criteria should we base this location decision?On what criteria should we base this location decision?
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Operations Management
The Critical Decisions - continued
• Process and Capacity design– What processes will these products require and in what
order?– What equipment and technology is necessary for these
processes?• Location
– Where should we put the facility– On what criteria should we base this location decision?
Layout designLayout design• How should we arrange the facility?How should we arrange the facility?• How large a facility is required?How large a facility is required?
Human resources and job designHuman resources and job design• How do we provide a reasonable work environment?How do we provide a reasonable work environment?• How much can we expect our employees to produce?How much can we expect our employees to produce?
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Operations Management
The Critical Decisions - continued
• Supply chain management and JIT “Just-in-time” Inventory, Material Requirements Planning
– Should we make or buy this item?– Who are our good suppliers and how many should we have?– How much inventory of each item should we have?– When do we re-order?
Immediate, short term, and project schedulingImmediate, short term, and project scheduling• Is subcontracting production a good idea?Is subcontracting production a good idea?• Are we better off keeping people on the payroll during Are we better off keeping people on the payroll during
slowdowns?slowdowns? MaintenanceMaintenance
• Who is responsible for maintenance?Who is responsible for maintenance?
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Operations Management
Organizational Functions
• Marketing - generates demand or at least takes the order for a product or service
• Operations - creates the product
• Finance/accounting - tracks how well the organization is doing, pays the bills, collects the money
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Operations Management
Organizational Functions
• Marketing– Gets customers
• Operations– Creates product or service
• Finance/Accounting– Obtain funds– Tracks money
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Operations Management
Where are the OM Jobs?
• Technology/methods• Facilities/space utilization• Strategic issues• Response time• People/team development• Customer service• Quality• Cost reduction• Inventory reduction• Productivity improvement
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Operations Management
New Challenges in OM
• Local or national focus
• Batch shipments• Low bid purchasing
• Lengthy product development
• Standard products• Job specialization
¨ Global focus¨ Just-in-time¨ Supply chain
partnering
¨ Rapid product development
¨ Mass customization
¨ Empowered employees
From To
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Operations Management
Characteristics of Goods
• Tangible product
• Consistent product definition
• Production usually separate from consumption
• Can be inventoried
• Low customer interaction
Characteristics of Service• Intangible product
• Produced & consumed at same time
• Often unique
• High customer interaction
• Inconsistent product definition
• Often knowledge-based
• Frequently dispersed
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Operations Management
Goods versus Services
• Can be resold• Can be inventoried
• Some aspects of quality measurable
• Selling is distinct from production
¨ Reselling unusual¨ Difficult to inventory
¨ Quality difficult to measure
¨ Selling is part of service
Good Service
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Operations Management
Goods versus Services
• Product is transportable
• Site of facility important for cost
• Often easy to automate
• Revenue generated primarily from tangible product
¨ Provider, not product is transportable
¨ Site of facility important for customer contact
¨ Often difficult to automate
¨ Revenue generated primarily from intangible service.
Good Service
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Operations Management
The Economic System Transforms Inputs to Outputs
The economic system transforms inputs to outputs
Land, Labor, Capital, Management
Goods and Services
Feedback loop
Inputs Process Outputs
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Operations Management
Productivity¨ Measure of process improvement
¨ Represents output relative to input
¨ Productivity increases improve standard of living
ProductivityProductivityUnits producedUnits produced
Input usedInput used
Productivity = Output
Labor + Material+ Energy+ Capital+Miscellaneous
Productivity VariablesProductivity Variables
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Operations Management
Measurement Problems
• Quality may change while the quantity of inputs and outputs remains constant.
• External elements may cause an increase or decrease in productivity.
• Precise units of measure may be lacking
Productivity Variables
• Labor - contributes about 1/6 of the annual increase
• Capital - contributes about 1/6 of the annual increase
• Management - contributes about 2/3 of the annual increase
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Operations Management
Key Variables for Improved Labor Productivity
• Basic education appropriate for the labor force
• Diet of the labor force
• Social overhead that makes labor available
• Maintaining and enhancing skills in the midst of rapidly changing technology and knowledge
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Operations Management
Jobs in US
26%
18%
16%
14%
6%6% 5% 5%
3%1%
Education, Health, etc.
Manufacturing
Retail Trade
State & Local Gov't
Finance, Insurance
Wholesale Trade
Transport, Public Util.
Construction
Federal Government
Mining
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Operations Management
Employment by Sector (Malaysia)
Sector Share (%) - 2003
Agriculture etc.
Mining
Manufacturing
Construction
Services
–Elec, gas and water
–Wholesale, retail, hotel and restraunts
–Finance, insurance real estates and business service
–Transport, storage and communications
Govt services
Other services
13.8
0.3
21.7
9.5
50.3
0.9
17.1
6.3
5.2
10.1
10.7
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Operations Management
Productivity Growth 1971- 1992
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
United StatesWest GermanyJapan
Whole Economy Manufacturing
% p
er y
ear LaborLabor
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Operations Management
Growth Rate of Labor Productivity
0
2
4
6
0 2 4 6 8 10 12
Growth Rate of Gross Capital Per Worker (%)
U.S.
U.K.
W Germany
France
Japan
1964-84
1979-84Gro
wth
Ra
te o
f L
ab
or
Pro
du
cti
vit
y (
%)
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Operations Management
0
2
4
6
8
10
10 15 20 25 30 35
Nonresidential fixed investment to GNP (%)
U.S.
U.K.
Canada
Italy
Belgium
France
Netherlands
Japan
Best fitPe
rce
nt
inc
rea
se
in
p
rod
uc
tiv
ity
(M
fg)
Investment and Productivity in Selected Nations