Ch01 p1 ppt
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McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
11
Introduction to Operations
Management
1-2
Learning ObjectivesLearning Objectives
Define the term operations management Identify the three major functional areas of
organizations and describe how they interrelate
Compare and contrast service and manufacturing operations
Describe the operations function and the nature of the operations manager’s job
1-3
Learning ObjectivesLearning Objectives
Differentiate between design and operation of production systems
Describe the key aspects of operations management decision making
Briefly describe the historicalevolution of operations management
Identify current trends that impact operations management
1-4
Operations ManagementOperations Management
Operations Management is:
The management of systems or processes that create goods and/or provide services
Operations Management affects: Companies’ ability to compete Nation’s ability to compete internationally
1-5
The OrganizationThe Organization
The Three Basic Functions
Organization
Finance Operations Marketing
Figure 1.1
1-6
Value-Added ProcessValue-Added Process
The operations function involves the conversion of inputs into outputs
Inputs Land Labor Capital
Transformation/Conversion
process
Outputs Goods Services
Control
Feedback
FeedbackFeedback
Value added
Figure 1.2
1-7
Value-Added & Product Value-Added & Product PackagesPackages
Value-added is the difference between the cost of inputs and the value or price of outputs.
Product packages are a combination of goods and services.
Product packages can make a company more competitive.
1-8
Automobile assembly, steel making
Home remodeling, retail sales
Automobile Repair, fast food
Goods-service ContinuumGoods-service ContinuumFigure 1.3
Computer repair, restaurant meal
Song writing, software development
Goods Service
Surgery, teaching
1-9
Food ProcessorFood Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans
Water CuttingEnergy CookingLabor PackingBuilding LabelingEquipment
Table 1.2
1-10
Hospital ProcessHospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy patientsHospital Surgery
Medical Supplies MonitoringEquipment MedicationLaboratories Therapy
Table 1.2
1-12
Production of Goods vs. Delivery of Production of Goods vs. Delivery of ServicesServices
Production of goods – tangible output Delivery of services – an act Service job categories
Government Wholesale/retail Financial services Healthcare Personal services Business services Education
1-13
Key DifferencesKey Differences
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
1-14
Key DifferencesKey Differences
6. Production and delivery
7. Quality assurance
8. Amount of inventory
9. Evaluation of work
10. Ability to patent design
1-15
Goods vs ServiceGoods vs ServiceCharacteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
1-16
Operations Management includes: Forecasting Capacity planning Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities Supply chain management And more . . .
Scope of Operations ManagementScope of Operations Management
1-17
Types of OperationsTypes of OperationsTable 1.4
Operations ExamplesGoods Producing Farming, mining, construction,
manufacturing, power generationStorage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,hotels, airlines
Exchange Retailing, wholesaling, banking,renting, leasing, library, loans
Entertainment Films, radio and television,concerts, recording
Communication Newspapers, radio and televisionnewscasts, telephone, satellites
1-18
Year Mfg. Service45 79 2150 72 2855 72 2860 68 3265 64 3670 64 3675 58 4280 44 4685 43 5790 35 6595 25 7500 30 70
02 25 75
U.S. Manufacturing vs. Service Employment
0102030405060708090
45 50 55 60 65 70 75 80 85 90 95 00 02 05
Year
Per
cent
Mfg.
Service
Figure 1.4
1-19
Decline in Manufacturing JobsDecline in Manufacturing Jobs
Productivity Increasing productivity allows companies to
maintain or increase their output using fewer workers
Outsourcing Some manufacturing work has been outsourced
to more productive companies
1-20
Why Manufacturing MattersWhy Manufacturing Matters
Over 18 million workers in manufacturing jobs
Accounts for over 70% of value of U.S. exports
Average full-time compensation about 20% higher than average of all workers
Manufacturing workers more likely to have benefits
Productivity growth in manufacturing in the last 5 years is more than double U.S. economy
1-21
Why Manufacturing MattersWhy Manufacturing Matters
More than half of the total R&D performed is in the manufacturing industries
Manufacturing workers in California earn an average of about $25,000 more a year than service workers
When a California manufacturing job is lost, an average of 2.5 service jobs are lost
1-22
Challenges of Managing Challenges of Managing ServicesServices
Service jobs are often less structured than manufacturing jobs
Customer contact is higher Worker skill levels are lower Services hire many low-skill, entry-level workers Employee turnover is higher Input variability is higher Service performance can be affected by worker’s
personal factors
1-23
Operations Management Operations Management Decision MakingDecision Making
Models Quantitative approaches Analysis of trade-offs Systems approach Establishing priorities Ethics
1-24
Key Decisions of Operations Key Decisions of Operations ManagersManagers
WhatWhat resources/what amounts
WhenNeeded/scheduled/ordered
WhereWork to be done
HowDesigned
WhoTo do the work
1-25
Decision MakingDecision Making
System Design– capacity– location– arrangement of departments– product and service planning– acquisition and placement of
equipment