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Chapter 1 - Introduction to Operations Management

Operations Managementby

R. Dan Reid & Nada R. Sanders2nd Edition © Wiley 2005

PowerPoint Presentation by R.B. Clough - UNH

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Introduction to Operations Management

Outline What is operations management? Value added, efficiency, and effectiveness The transformation process, measurement,

feedback Why do we study operations management? Similarities between manufacturing and services Operations management decisions (Table 1-1) Diagram of the course

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What is Operations Management?

The business function responsible for planning, coordinating, and controlling the resources (inputs) needed to make a company’s products (goods and services)

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Typical Organization Chart

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Value Added, Efficiency, Effectiveness

Value added: value of outputs – cost of inputs

Efficiency: performing activities at the lowest possible costs

Effectiveness: doing what the company must do to serve customers and compete

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Transformation Process

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Measurement and Feedback Measurement systems in operations collect

data about the transformation process, the inputs, and the outputs

Feedback is the use of data to improve the transformation process and the inputs, thereby improving the outputs.

Data from operations measurements systems Cost data from accounting systems Customer information: returned products,

complaints, customer surveys, focus groups

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Typical Measures Used to Improve Operations Management

Costs Quality Quantity produced or number of

customers served Timeliness (on-time delivery, service

time, fast delivery)

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Why do we study Operations? (1) Companies need a strong operations function to

compete. Operations helps attract and retain customers by

Introducing new technology that allows the firm to offer new or better goods and services

Participating in product design teams Providing the quality and timeliness that

customers want Reducing the costs of operations so that

products can be sold at a price that customers will pay.

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Why do we study Operations? (2)To learn tasks that professionals do

Quality management Project management Job design Scheduling work Increasing productivity

MGMT 326

Foundationsof Operations

Introduction

Strategy

QualityAssurance

Capacity,Facilities,and Work

Design

Planning& Control

Products &Processes